DAQO New Energy Q4 2025 Earnings Report

DAQO New Energy EPS Results

• Actual EPS: -$0.11
• Consensus EPS: -$0.04
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

DAQO New Energy Revenue Results

• Actual Revenue: $221.71 million
• Expected Revenue: $276.94 million
• Beat/Miss: Missed by -$55.23 million
• YoY Revenue Growth: N/A

DAQO New Energy Announcement Details

• Quarter: Q4 2025
• Date: 3/2/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 8:00AM ET

DA​​QO New Energy Corp. (NYSE: DQ) is a China-based manufacturer of high-purity polysilicon, a key raw material used to produce the wafers, cells and modules that make up solar photovoltaic panels. The company supplies polysilicon primarily to manufacturers in the global solar power industry.

Through its operating subsidiary, Xinjiang DAQO New Energy (NYSE:DQ) Co., Ltd., the company produces polysilicon at manufacturing facilities in China. Its products include polysilicon used in both monocrystalline and multicrystalline solar applications, with product specifications designed for use in advanced photovoltaic manufacturing.

Daqo New Energy was established in 2008 and began commercial polysilicon production in 2009. The company has expanded its production operations over time and serves customers across the solar supply chain, with China representing the center of its manufacturing and customer relationships.

DAQO New Energy Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q4/2025 showed a financial turnaround with positive EBITDA of $1.7 million, a narrowed net loss attributable to shareholders of $170.5 million, and the company reporting positive operating cash flow for 2025 (company cited roughly $56–66 million).
• Positive Sentiment: Unit costs improved materially — Q4 record low cash cost of $4.46/kg and total production cost of $5.83/kg — and management expects similar Q1/Q2 levels with further reductions in H2 2026.
• Positive Sentiment: Balance sheet strength: the company reported $980 million in cash plus short-term investments, notes and deposits totaling about $2.27 billion of highly liquid assets and no debt, giving strategic flexibility.
• Neutral Sentiment: Regulatory and market outlook remains a key driver and uncertainty — China’s “anti-involution” policies, new pricing/energy standards and industry consolidation (SPV activity) aim to curb below-cost selling and excess capacity; management expects a price floor near RMB 53–54/kg and 2026 production guidance of 140,000–170,000 MT, but implementation is multi-year and outcomes are uncertain.

Presentation

[Operator]

Good day, welcome to the Daqo New Energy New fourth quarter 2025 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

[Operator]

To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jesse Zhao, Investor Relations Director. Please go ahead.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

Hello, everyone, I'm Jesse Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the fourth quarter of 2025, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our Deputy CEO, Ms. Anita Xu, our CFO, Mr. Ming Yang, and myself.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

Our Chairman and CEO, Mr. Jiang Xu, is on a business trip now, so Ms. Anita Xu will deliver our management remarks on behalf of Mr. Xu. Today's call will begin with an update from Ms. Xu on market conditions and company operations, and then Mr. Yang will discuss the company's financial performance for the quarter. After that, we will open the floor to Q&A from the audience.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

A number of factors could cause actual results to differ materially from those contained in any forward-looking statements. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission. These statements only reflect our current and preliminary review as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

All information provided in today's call is as of today, and we undertake no duty to update such information except as required under applicable law. During the call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer this translation into U.S. dollars solely for the convenience of the audience. I will turn the call to our Deputy CEO, Ms. Anita Xu. Ms. Xu, please go ahead.

[Anita Xu, Deputy CEO at Daqo New Energy]

Hello, everyone. This is Anita. Happy Year of the Horse, and I'll now deliver the remarks on behalf of our chairman, Mr. Xu. In 2025, China's N-type Revolution Initiative supported the solar PV industry's gradual emergence from a cyclical downturn. As a result, solar products market prices rebounded from the third quarter onward, with the polysilicon sector posting the most notable gains.

[Anita Xu, Deputy CEO at Daqo New Energy]

Following with this trend, our utilization rate increased from 33% in Q1 to 55% in Q4, bringing our annual production volumes to 123,652 metric tons, in line with our guidance of 121,000 metric tons-124,000 metric tons, representing a 39.7% year-over-year decrease from 205 and 68 metric tons in 2024.

[Anita Xu, Deputy CEO at Daqo New Energy]

Furthermore, our 2025 sales volume reached 126,707 metric tons, exceeding production volume and reducing year-end inventory to a reasonable level. In the second half of 2025, we strategically ramped up sales efforts to capitalize on favorable pricing dynamics.

[Anita Xu, Deputy CEO at Daqo New Energy]

The strong market response highlighted growing customer confidence in our product quality and their continued preference for our brand in this new pricing environment. polysilicon ASPs decreased 7.2% from $5.66 per kilogram in 2024 to $5.25 per kilogram in 2025. This lower pricing, combined with reduced sales volume, resulted in revenue of $665 million in 2025, compared to $1 billion in 2024.

[Anita Xu, Deputy CEO at Daqo New Energy]

Despite the decline in our top line, we significantly narrowed our losses during the year as compared to 2024. In particular, EBITDA swung to a positive $1.7 million in 2025, compared to a negative -$337.4 million in 2024.

[Anita Xu, Deputy CEO at Daqo New Energy]

While net loss attributable to Daqo New Energy Corp shareholders narrowed to $170.5 million-$345.2 million in 2024. Moreover, we generated a $66.1 million in positive operating cash flow in 2025, marking a notable turnaround from the $435 million outflow recorded in 2024. We continue to maintain a strong balance sheet and ample cash reserves.

[Anita Xu, Deputy CEO at Daqo New Energy]

At the end of 2025, we had a cash balance of $980 million, short-term investments of $114 million, bank notes receivable of $136 million, and a fixed-term bank deposit balance of $1 billion. In total, these highly liquid assets stood at a $2.27 billion, representing an increase of $57 million compared to the end of the previous quarter.

[Anita Xu, Deputy CEO at Daqo New Energy]

This solid financial foundation provides us with confidence and strategic flexibility to navigate the ongoing market recovery and capitalize on long-term opportunities. Operationally, we continued to implement proactive measures in the fourth quarter to mitigate market oversupply, including operating at a nameplate capacity utilization rate of 55%.

[Anita Xu, Deputy CEO at Daqo New Energy]

Total polysilicon production for the fourth quarter was 42,181 metric tons, in line with our guidance range of 39,500-42,500 metric tons. Our sales volume for the quarter reached 38,167 metric tons.

[Anita Xu, Deputy CEO at Daqo New Energy]

In addition, we comprehensively reduced our production costs through process improvements, manufacturing efficiency gains, and raw material cost optimization. Extending our ongoing cost reduction initiatives, total production costs declined by 9% to $5.83 per kilogram in Q4 2025, from $6.38 per kilogram in Q3 2025.

[Anita Xu, Deputy CEO at Daqo New Energy]

Total idle facility-related costs, which consists primarily of non-cash depreciation expenses, alongside approximately at $0.10 per kilogram in cash costs for maintenance, also fell to $0.74 per kilogram in Q4 from $1.18 per kilogram in Q3, driven by higher production levels.

[Anita Xu, Deputy CEO at Daqo New Energy]

Notably, cash costs decreased by 2% from $4.54 per kilogram in Q3 to a new record low of $4.46 U.S. dollars per kilogram in Q4. In light of current market conditions, we expect our total polysilicon production volume in the first quarter of 2026 to be approximately 35,000 metric tons-40,000 metric tons, and our full year 2026 production volume to be in the range of 140,000 metric tons-170,000 metric tons.

[Anita Xu, Deputy CEO at Daqo New Energy]

Chinese authorities demonstrated strong resolve in tackling irrational competition and industry overcapacity, formally designating anti-involution as a national priority within China's Fourteenth Five-Year Plan, and the solar PV industry was a key focus of these efforts. These initiatives have driven a structural shift from price-based competition to value-driven differentiation.

[Anita Xu, Deputy CEO at Daqo New Energy]

To advance industry governance, authorities deployed targeted measures, including standards, guidance, quality supervision, price enforcement, and promotion of technological progress. Specifically, this involved updating legislative frameworks such as the revised Anti-Unfair Competition Law and the Draft Amendment to the Pricing Law, which mandate that sales shall not be below cost. Furthermore, a new mandatory national standard was drafted to set strict energy consumption limits for polysilicon production on a per unit basis.

[Anita Xu, Deputy CEO at Daqo New Energy]

Led by the China Photovoltaic Industry Association, major polysilicon manufacturers have proactively responded to these initiatives, enforcing self-discipline and exploring innovative market-oriented approaches to combat excess capacity and pricing violations. These coordinated efforts have yielded measurable results in curbing overcapacity.

[Anita Xu, Deputy CEO at Daqo New Energy]

The overall production volume fell by 28.4% to 1.32 million metric tons in 2025, and market prices surged more than 50% from the mid-2025 lows to RMB 50-56 per kilogram by year-end. Looking ahead, we expect anti-involution initiatives will remain a central theme for the solar PV industry, supporting a more balanced supply and demand dynamic and driving higher quality growth through 2026. More broadly, the solar PV industry continues to exhibit compelling long-term growth prospects.

[Anita Xu, Deputy CEO at Daqo New Energy]

In 2025, China's newly installed solar PV capacity grew 14% year-over-year to 317 GW, setting yet another record high and proving that market potential continues to exceed expectations. As the global AI industry scales rapidly, space-based solar power is increasingly viewed as a vital solution to the immense and expanding energy demands of AI data centers, creating a significant new growth engine for the sector.

[Anita Xu, Deputy CEO at Daqo New Energy]

Looking ahead, as one of the world's lowest-cost producers of the highest-quality N-type polysilicon, with a strong balance sheet and no debt, we remain optimistic about the sector and believe we're ideally positioned to capitalize on the market recovery and these long-term growth opportunities. We will continue to strengthen our competitive edge through advancements in high-efficiency N-type technology and cost optimization via digital transformation and AI adoption.

[Anita Xu, Deputy CEO at Daqo New Energy]

As the world accelerates its transition to clean energy, we're confident in our ability to play a leading role in powering the future. Now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

[Ming Yang, CFO at Daqo New Energy]

Thank you, Anita. Hello, everyone. This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnings conference call today. I will now go over the company's fourth quarter 2025 financial performance. Revenues were $221.7 million, compared to $244.6 million in the third quarter of 2025, and $195.4 million in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

The decrease in revenue compared to the third quarter of 2025 was primarily due to a decrease in sales volume. Gross profit was $15.4 million, compared to $9.7 million in the third quarter of 2025, and gross loss of $65.3 million in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

Gross margin was 7%, compared to 3.9% in the third quarter of 2025 and -33% in the fourth quarter of 2024. The increase in gross margin compared to the third quarter of 2025 was primarily due to the decrease in production costs. Selling, General and Administrative Expenses were $18.7 million, compared to $32.3 million in the third quarter of 2025 and $29.4 million in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

The decrease was primarily due to the reduction in non-cash share-based compensation costs related to the company's share incentive plan, which was zero for the fourth quarter and $18.6 million in the third quarter of 2025.

[Ming Yang, CFO at Daqo New Energy]

The company recognized $19.3 million non-cash expense related to allowance for credit loss in the fourth quarter, mainly due to the uncertainty regarding the recoverability of long outstanding other receivables. Let me give a little more color on this. During the early development stage of the company's Inner Mongolia polysilicon project, funds were lent to a local government affiliated industrial park development entity for supporting the infrastructure building and development of our Inner Mongolia polysilicon site.

[Ming Yang, CFO at Daqo New Energy]

The local government-affiliated entity will repay these funds later. However, due to industry downturn that resulted in insufficient local tax revenue, the repayment has been delayed. As a result, we recorded an allowance for credit loss due to a delayed repayment of these funds. All amounts due has been reserved, and we do not expect any future related allowance for credit loss.

[Ming Yang, CFO at Daqo New Energy]

R&D expenses were $0.7 million, compared to $0.6 million in the third quarter of 2025 and $0.4 million in the fourth quarter of 2024. R&D expenses converted from period to period reflect R&D activities that take place during the quarter. As a result, the foregoing loss from operations was $20.9 million, compared to $20.3 million in the third quarter of 2025 and $300 million in the fourth quarter of 2024. Operating margin was -9.4%, compared to -8.3% in the third quarter of 2025 and -154% in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

Net loss attributable to Daqo New Energy shareholders was $7.3 million, compared to $14.9 million in the third quarter of 2025 and $180 million in the fourth quarter of 2024. Loss per basic ADS was $0.11, compared to $0.22 in the third quarter of 2025 and $2.71 in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

Adjusted net loss attributable to Daqo New Energy shareholders, excluding non-cash share-based compensation costs, was $7.3 million, compared to adjusted net income attributable to Daqo New Energy shareholders of $3.7 million in the third quarter of 2025, and adjusted net loss attributable to Daqo New Energy shareholders of $170.6 million in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

Adjusted loss per basic ADS was $0.11, compared to adjusted earnings per basic ADS of $0.05 in the third quarter of 2025, and adjusted loss per basic ADS of $2.56 in the fourth quarter of 2024. EBITDA was $52 million, compared to $45.8 million in the third quarter of 2025 and -$235 million in the fourth quarter of 2024.

[Ming Yang, CFO at Daqo New Energy]

EBITDA margin was 23.7%, compared to 18.7% in the third quarter of 2025, and -120% in the fourth quarter of 2024. I will go over the company's full year 2025 financial results. Revenues were $665 million, compared to $1.03 billion in 2024.

[Ming Yang, CFO at Daqo New Energy]

The decrease was primarily due to lower sales volume, as well as lower polysilicon average selling prices. Gross loss was $137.9 million, compared to $212.9 million in 2024. Gross margin was -20.7%, compared to -20.7% in 2024. The decrease in gross loss was primarily due to lower revenue.

[Ming Yang, CFO at Daqo New Energy]

SG&A expenses were $118.2 million, compared to $143 million in 2024. The decrease was primarily due to the reduction in non-cash share-based compensation costs related to the company's share incentive plan, which was $55.8 million and $72.4 million in 2025 and 2024, respectively. R&D expenses were $2.6 million, compared to $4.6 million in 2024. R&D expenses reflect R&D activities that take place during the period.

[Ming Yang, CFO at Daqo New Energy]

As a result, the foregoing loss from operations was $270 million compared to $564 million in 2024. Operating margin was -40.6%, compared to -54.8% in 2024. Net interest income was $9 million, compared to $30.2 million in 2024. The decrease in interest income was due to lower cash bank balance, as well as lower bank interest rate.

[Ming Yang, CFO at Daqo New Energy]

In addition to the interest income, the company did record $24.1 million in gain on short-term investments for 2025, related to the purchase of bank short-term investment products. Net loss attributable to Daqo New Energy Corp. shareholders was $170.5 million, compared to $345 million in 2024. Loss per basic ADS was $2.53, compared to $5.22 in 2024.

[Ming Yang, CFO at Daqo New Energy]

Adjusted net loss to Daqo New Energy shareholders was $114.7 million, compared to $272 million in 2024. Adjusted loss per basic ADS was $0.70, compared to $4.12 in 2024. EBITDA was $1.7 million, compared to -$337 million in 2024. EBITDA margin was 0.3%, compared to -32.8% in 2024. On the company's financial condition. As of December 31st, 2025, the company had $980 million in cash equivalents and restricted cash, compared to $551.6 million as of September 30th, 2025, and $1.04 billion as of December 31st, 2024.

[Ming Yang, CFO at Daqo New Energy]

As of December 31st, 2025, short-term investment was $114 million, compared to $431 million as of September 30th, 2025, and $9.6 million as of December 31st, 2024. As of December 31st, 2025, note receivable balance was $135.5 million, compared to $157 million as of September 30th, 2025, and $55.2 million as of December 31st, 2024.

[Ming Yang, CFO at Daqo New Energy]

Note receivables represents bank notes with maturity within six months. As of December 31st, 2025, a balance of six-term deposit within one year was $972.4 million, compared to $1.03 billion as of September 30th, 2025, and $1.08 billion as of December 31st, 2024. On the company's cash flows.

[Ming Yang, CFO at Daqo New Energy]

For the 12 months ended December 31st, 2025, net cash provided operating activities was $56.1 million, compared to net cash used in operating activities of $435 million in the same period of 2024. For the 12 months ended December 31st, 2025, net cash used in investing activities was $140.7 million, compared to $1.48 billion in the same period of 2024.

[Ming Yang, CFO at Daqo New Energy]

The net cash used in investing activities in 2025 include $179.5 million for the purchase of property, plant and equipment, primarily related to the remaining capital expenditures of the companies in the Mongolia polysilicon project.

[Ming Yang, CFO at Daqo New Energy]

For the year 2026, the company currently expects approximately $100 million-$150 million of capital expenditures for the year, primarily related to the remaining payments for the Inner Mongolia project, as well as maintenance CapEx. For the 12 months ended December 31st, 2025, net cash using finance activities was $0.9 million, compared to $47.4 million in the same period of 2024.

[Ming Yang, CFO at Daqo New Energy]

The net cash using this finance activity in 2025 was related to $0.9 million in stock repurchases made by the company's subsidiary, Xinjiang Daqo, to its minority shareholders. That concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin.

[Operator]

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Alan Han with JPMorgan. Please go ahead.

[Alan Han, Equity Research at JP Morgan]

Thank you, management, for taking my questions, and it's great to see, like, a recovery for the company. I mean, I have, like, the first question I have is regarding, like, a potential buyback, because, like, it's great to see we are finally generating, operating, positive operating cash flow for the full year last year. In this sort of environment, like, how should we think about, like, a buyback strategy?

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Alan, for raising the question. First, I would say that share repurchase is absolutely a topic that we've been monitoring closely as part of our capital allocation strategy. We're taking a more prudent and informed approach, especially given the evolving landscape around China's anti-involution policies in the solar sector.

[Anita Xu, Deputy CEO at Daqo New Energy]

While we definitely see tremendous value and intrinsic value in our shares, especially amid the current market dynamics. We believe it's essential to wait for more clarity on the policy implementation and also the outcomes before proceeding. Well, we believe that this wait-and-see stance would allow us to optimize the timing and also the impact of the repurchase program better.

[Alan Han, Equity Research at JP Morgan]

Thank you. My next question is on the policy outlook. I guess, we are aware that, like, a consolidation platform was formed in December, soon after, followed by, like, antitrust, I mean, questions by some of the regulator. I mean, can you give us, like, a color? I mean, or what do you think how the industry consolidation would happen?

[Alan Han, Equity Research at JP Morgan]

I mean, should we just, like, discount the consolidation for the moment, or how should we think about that? Also, I just noticed, like, one of your peers, has just conducted, like, M&A, I mean, on buying out some of the small traders. I mean, is that part of your strategy as well?

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Alan. Maybe I'll answer the question of the recent acquisition by our peers first and then move on to the anti-involution dynamics. I would say that we see this as the individual player's strategic decision, especially reflecting their confidence in the sector's future and also their determination to further strengthen their competitive positioning.

[Anita Xu, Deputy CEO at Daqo New Energy]

For us, I would say we are completely open-minded toward opportunities that could create value for the industry and also for our shareholders. We do view such transactions as constructive that would drive the market consolidation the national anti-involution policy is designed to achieve. Direct acquisition or consolidation via the SPV that you mentioned, are both forms toward achieving the same goal, essentially shifting toward a more rational and a more efficient industry structure, something that we strongly support.

[Anita Xu, Deputy CEO at Daqo New Energy]

That being said, I just want to reiterate that the anti-involution is designated as a national priority within China's next Five-Year Plan. As one of the major players in industries, we are determined to address the overcapacity challenge, which we believe would optimally become a value-driven gain by innovations and also technological progresses, instead of the current price-based competition, and lead to a more healthier and more sustainable industry.

[Anita Xu, Deputy CEO at Daqo New Energy]

Indeed, the SPV for consolidation that many of you might be aware, was successfully established by the end of 2025 in December, which marks the first step and also signaling our resolve to collaboratively tackle the overcapacity issue. Of course, it's not an easy task, with lots of back and forth within the participants and also with the government entities.

[Anita Xu, Deputy CEO at Daqo New Energy]

I want to say that discussions are actively ongoing, with a strong emphasis on maintaining a more market-oriented approach to ensure that we meet fair competition, and we are abiding by the guidelines, the regulatory guidelines. To provide more color, we will approach this in a more well-defined phases, potentially with initial investment injections anticipated in near term, which would lay the foundation of the financial stability.

[Anita Xu, Deputy CEO at Daqo New Energy]

From there, we will gradually move towards the consolidation, allowing for more efficient resource allocation and enhanced operational synergies across the value chain. We believe that this structured progression will not only align with the current regulatory guidelines, but also position our company and the industry at large for longer-term resilience and profitability. We're quite optimistic about these developments.

[Alan Han, Equity Research at JP Morgan]

Okay, thank you, for your answer. With that, I will pass it on.

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Alan.

[Operator]

The next question comes from Phil Shen with Roth Capital Partners. Please go ahead.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Hey, guys. Thanks for taking my questions. As a follow-up to that last question from Alan, was wondering if you might be able to share, what are some of the key milestones that we should be looking for in the coming quarters, that show progress, on, you know, the mandatory national standard?

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

You know, there's a draft, but when does that become implemented, for example? With the Anti-Unfair Competition Law, and the Draft Amendment to the Pricing Law, like, what are the milestones that we should be following so that we can see, the progress in the industry structure, as well as the competition or the, you know, the industry consolidating? Thank you.

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Phil. I would say Because there's not much information, and there's a lack of clarity and transparency in the current dynamics, it's difficult for us to say exactly what we might be monitoring because not a lot of details are released until the policies land. Prices, we definitely see a pricing recovery, and as part of the price laws, sales should not be below the industry level cost, so that's a positive side. Yeah, I would say we would have to be a bit more patient with the policies, as the conversations are still ongoing.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Okay, got it. Thank you. Then-

[Ming Yang, CFO at Daqo New Energy]

This is Ming.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Go ahead, Ming.

[Ming Yang, CFO at Daqo New Energy]

Let me just quickly follow up. I think there's a very high level government meeting coming up that will discuss the next five-year plan. As part of that, I think there's a presentation by a key government agency on the progress of anti-involution. I think after the top-level central government meeting, I think more policies will come forward. That's something to monitor.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Okay, great. Okay, thanks, Ming. Shifting over to the price outlook, you know, I know there's not as much clarity on the milestones for policy, but what's your assumption for poly prices in Q1 and Q2? If you have a view for the rest of the year, that would be great. Thanks.

[Anita Xu, Deputy CEO at Daqo New Energy]

Like I just said, as part of the Pricing Law, like, sales should not be below the industry level cost. I would say the lower bound will be at least RMB 53-54 per kilogram, and we would remain around that level for the coming quarters. It's hard for us to say what where prices would go in the coming quarters, because that would essentially depends on how the SPV would evolve and what would be the pace of the consolidation.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Okay, got it. For the things that you guys can control, costs were down, and hit a record low in Q4. How much do you think you can lower your cash costs, you know, by the end of 2026? Thanks.

[Ming Yang, CFO at Daqo New Energy]

Hi, Phil, this is Ming. I think we continue to make progress on both production costs and cash costs. I think this quarter will benefited from lower energy price or cost, so as just no manufacturing efficiencies. I think we should continue to benefit. I do think that for probably Q1 and Q2, we're likely to see similar cash costs to the Q4 level, and then with further reduction in the second half.

[Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners]

Great. Okay. All right, Ming, Anita, thank you very much. I'll pass it on.

[Ming Yang, CFO at Daqo New Energy]

Great. Thank you.

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Phil.

[Operator]

The next question comes from Emmett Lau with Jefferies. Please go ahead.

[Emmett Lau, Analyst at Jefferies]

Thanks for taking my question. I think it's a follow-up on the previous question. Basically, it's intertwined, like, if the price you mentioned, it should be above 60 RMB. The question here is: but if the price is not allowed to push up to above 60 RMB, then what is the incentive here for acquiring others' capacities like the plan before?

[Emmett Lau, Analyst at Jefferies]

I don't know, like, what was the thinking behind or the acquisition will happen, like what your peers are doing. Basically, each company are having a standalone basis, or, like, I don't know, like, how is the whole coordination versus the price is coordinated?

[Anita Xu, Deputy CEO at Daqo New Energy]

Sorry, Lau, can you repeat the question again? I don't think I caught all the question.

[Emmett Lau, Analyst at Jefferies]

Yeah, so I mean, previously, the incentive, to my understanding, is that you, the remaining players can push prices above RMB 60. I think there was some maybe window guidance from the regulatory kind of saying that you cannot control prices. If the industry or the larger players are still going to acquire the smaller players, you can't push up the prices, what is the point of acquiring small players? How do you expect the price outlook going forward, because, like, if you couldn't make money, why would you acquire anyone?

[Anita Xu, Deputy CEO at Daqo New Energy]

Like I said, I think it would have to be done in phases, right? First step is that, you are not allowed to be selling below the cost, then, gradually you would move on to the consolidation, and phasing out the excess in outdated capacities. It's hard for us to say how high prices can go, because, we want to focus on a more market-oriented approach to achieving this.

[Emmett Lau, Analyst at Jefferies]

Do you mean like the acquisition or will happen in phases which probably last for a longer time?

[Anita Xu, Deputy CEO at Daqo New Energy]

Yeah, I would say it would have to be done over a couple years. Like, it won't be done, like, all at once.

[Emmett Lau, Analyst at Jefferies]

I see. I've noticed that prices actually have gone down a little bit recently from around RMB 60 to the 50-ish. I think futures price is below 50 already. Like, what do you expect the pricing in first Q and second quarter?

[Anita Xu, Deputy CEO at Daqo New Energy]

Well, I think Phil also touched upon the pricing outlook for the first half of 2026, I would say it would be at least, around RMB 53, RMB 54, given that's roughly the industry level cost currently. Moving forward, it will really depends on the pace of the consolidation. That will determine.

[Emmett Lau, Analyst at Jefferies]

Understood. Understood. In 4Q results, if I simply divide the revenue by the sales volume, apparently the ASP seems to be lower than the spot prices. I wonder if there's some delay recognition that might be delayed to first quarter and support the prices in third quarter's result? Why was that the revenue in 4Q up to be slightly lower than the spot prices?

[Ming Yang, CFO at Daqo New Energy]

Do you mean that the ASP in 4Q was below...

[Emmett Lau, Analyst at Jefferies]

Yeah.

[Ming Yang, CFO at Daqo New Energy]

...spot price?

[Emmett Lau, Analyst at Jefferies]

Yes.

[Ming Yang, CFO at Daqo New Energy]

Okay. I think in Q4 the mix is such that because we were ramping up additional volume, right, production, and the initial batch of production from that initial ramp up, I think it's consistent with our past experience that the qualities were not that great. Okay? Those actually, you know, had a market discount, right? I think it's maybe December, then we kind of normalized in terms of product quality. It's that factor that led to a slightly lower ASP, overall ASP.

[Emmett Lau, Analyst at Jefferies]

I see. Could investors understand this as a factor that would be normalized in first quarter, meaning that even if the spot market prices are marginally lower, but the ASP of the company will probably be more flattish than the decline in spot prices?

[Ming Yang, CFO at Daqo New Energy]

Yes, I think we would expect that. Yes.

[Emmett Lau, Analyst at Jefferies]

Thank you. I think my last question is on the more broader perspective from the industry. Would you consider any acquisition? I noticed that Anita Xu have mentioned you are open-minded, but are you liaising with any other specific player already, or it's still not on the schedule yet?

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Lau. Like I mentioned, at the beginning, so I think that we are open-minded toward these different opportunities, either via acquisition or consolidation. As part of the STVs, we're quite confident that we'll see something in formation in the near term or in the coming quarters. That would be our primary focus for now. However, in the worst case, of course, acquiring directly would also be something that we could consider.

[Emmett Lau, Analyst at Jefferies]

I see. I see. Thanks. I'll pass on. Thank you.

[Ming Yang, CFO at Daqo New Energy]

Great. Thanks, Lau.

[Operator]

The next question comes from Moen with Goldman Sachs. Please go ahead.

[Analyst at Goldman Sachs]

Yeah, hello. Thanks, management, for taking my question. To follow up, I have two follow-up questions. First is regarding to our M&A target. I heard, Anita, you say you are open-minded for the acquisition opportunities. Could you elaborate from here, like, is there any more keener target for us, like from 10+ to further higher in the future? What kind of capacity do we prefer more in terms of acquisition on our own? That's my first question.

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Moen. First, I think we, first, I would say that we are comfortable with where we are right now, given the current market dynamics, because essentially, none of the players is operating at full utilization rates. Of course, in the future, like our peers, if we want to further strengthen our positioning by grasping more market share, we don't have a specific number in mind as to how much we want, to where we want to be. I would say, if it's aligned with the national anti-involution initiative, it's something that we will consider to do in the future.

[Analyst at Goldman Sachs]

Yeah, sure. Thank you. That follows my second question. Can you help us to understand a bit more, like, based on our conversation with government and with the leading industry players, how we should define the success of the anti-involution in the poly sector from here, because in the past, we saw the poly price increase to above our OP cost, and then that could concludes the success of the anti-involution?

[Analyst at Goldman Sachs]

It seems poly price continue increasing and so a bit bumpy. Also, there is some ongoing acquisitions. What shall we look forward to in terms of the future anti-involution progress? When we can call it a successful, complete anti-involution in our poly sector? Thank you.

[Anita Xu, Deputy CEO at Daqo New Energy]

First, I think that for the anti-involution initiative, it would extend over a number of years, given that this round, the success problem is very deep-rooted. The nameplate capacity of, including everything, is more than 3 million metric tons, which is more than double the demand of now.

[Anita Xu, Deputy CEO at Daqo New Energy]

I would say until the more outdated and smaller players exit, and prices restore to a more healthier level, so that the industry as a whole becomes profitable to support the overall renewable energy, the goal. Yeah, that's when we would say the anti-involution is completed.

[Analyst at Goldman Sachs]

Thank you, Anita. Can we understand in this way, the key target for the anti-involution is to sustain the poly price at over current level at least, to help facilitate outdated capacity exit, and that will take longer time than expected. Ultimately, the key target going forward is to take the smaller players offline. Is that correct?

[Anita Xu, Deputy CEO at Daqo New Energy]

Yeah, I would say that's the aim.

[Analyst at Goldman Sachs]

Sure. The total outdated capacity to right?

[Anita Xu, Deputy CEO at Daqo New Energy]

Yeah, that's about the number.

[Analyst at Goldman Sachs]

Sure. Sure. Thank you so much. That's all from me.

[Ming Yang, CFO at Daqo New Energy]

Thank you, Moen.

[Operator]

The next question comes from Gordon Johnson with GLJ Research. Please go ahead.

[Gordon Johnson, CEO and Founder at GLJ Research]

Hey, guys. Thanks for taking the question. Really appreciate it. I guess piggybacking off of a question that was touched on earlier, it seems like in the spot market, polysilicon prices had surged and now they've come off and specifically, when I talk about the spot market, I'm talking about the futures market.

[Gordon Johnson, CEO and Founder at GLJ Research]

It also seems like, you know, due to the policy changes in China, demand has been, I think, somewhat subdued. Can you give us an outlook on what your expectations are with the puts and takes around anti-involution? What your outlook is on polysilicon prices in the first quarter and maybe the second quarter? I have a follow-up. Thank you.

[Anita Xu, Deputy CEO at Daqo New Energy]

Thank you, Gordon. You're asking about, first, the futures market and also the pricing outlook for the first and second quarter?

[Gordon Johnson, CEO and Founder at GLJ Research]

Yes, please.

[Anita Xu, Deputy CEO at Daqo New Energy]

Okay. For the pricing outlook question, but I can repeat it again. For the first and second quarter for pricing, as mandated by the Pricing Law, sales should not be below the industry level cost. I would say it should be at least 53-54 RMB per kilogram in the coming quarters.

[Anita Xu, Deputy CEO at Daqo New Energy]

For the futures market, I would say it's an area with the potential for risk management and also pricing stability in our industry. We do see participation in the futures market as an extension of the current sales strategy, offering the chance to hedge against volatility and also to secure some profitable margins.

[Anita Xu, Deputy CEO at Daqo New Energy]

Similar to our approach on share repurchases, I would say, we are prioritizing, policy clarity around the anti-involution dynamics in China before diving in the futures market. We would definitely, employ a more disciplined strategy in the future, a strategy gathering, more insights as the policy unfold, to ensure that our involvement is strategic and also, value creative.

[Gordon Johnson, CEO and Founder at GLJ Research]

That's helpful. I guess, and I appreciate that. I didn't mean to re-ask the question, looking at the futures price RMB 46.315 right now, and looking at the recent comments from the government on anti-involution, is there any potential that prices could come in in the first half below the RMB 53-54 range you're targeting? Is that something that you're pretty certain of?

[Anita Xu, Deputy CEO at Daqo New Energy]

I think that's the industry-level cost at the moment. Given that we're not supposed to be selling below that cost due to the Pricing Law, I would say, it should be somewhat sustained at that level.

[Gordon Johnson, CEO and Founder at GLJ Research]

Helpful. Then the last question is, you made significant improvement on your free cash flow. Congratulations in 2025. Do you have any thoughts on how you expect free cash flow to trend this year? Thanks for the questions.

[Ming Yang, CFO at Daqo New Energy]

Hi, Gordon. Let me answer that. This is Ming. Thanks for your question. Yeah, I think free cash flow will turn positive, especially in the second half of 2025. I think given our expectation for both volume and average selling price to be held more steady, as well as a cost to make stable to lower, we do believe that. I think based on the Q4 level, free cash flow should- without giving specific number, free cash flow should improve further, I think, from the Q4 level, going forward, for 2026.

[Gordon Johnson, CEO and Founder at GLJ Research]

Thanks again for the question.

[Ming Yang, CFO at Daqo New Energy]

Great. Thank you so much.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

[Jesse Zhao, Director of Investor Relations at Daqo New Energy]

Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Analysts

• Jesse Zhao, Director of Investor Relations at Daqo New Energy
• Anita Xu, Deputy CEO at Daqo New Energy
• Ming Yang, CFO at Daqo New Energy
• Alan Han, Equity Research at JP Morgan
• Phil Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners
• Emmett Lau, Analyst at Jefferies
• Analyst at Goldman Sachs
• Gordon Johnson, CEO and Founder at GLJ Research