Daqo: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 27, 2026, Daqo (NYSE:DQ) announced a substantial increase in quarterly sales volume following a shift to market-oriented pricing. The strategic pivot helped narrow operating losses while the company maintained a debt-free balance sheet with $2.06 billion in liquid assets. For long-term investors, navigating severe solar sector headwinds requires balancing low-cost manufacturing efficiency with disciplined capital allocation.

Three takeaways from the call stand out for long-term investors.

1. Market-Oriented Sales Strategy Drives Shipment Growth

Daqo abandoned its previous wait-and-see posture in June, choosing instead to align pricing with prevailing market dynamics. This shift helped third-quarter sales volume rebound to 46.9 thousand metric tons from 15.2 thousand metric tons in the prior quarter, narrowing operating losses despite soft solar industry conditions.

Following our shift in June from a wait and see stance to a more market oriented sales and pricing strategy. We believe this increase also reflects greater customer confidence in our product quality and continued preference for our products.
-- Xu Xiaoyu, Deputy Chief Executive Officer

2. Production Cuts Aim to Rebalance Market Inventory

Elevated solar supply chain inventory of roughly 700,000 metric tons continues to weigh on selling prices across the market. In response, Daqo plans to lower its fourth-quarter production volume to between 35,000 metric tons to 45,000 metric tons, aligning plant output with actual customer demand to support broader market recovery.

In response, we are taking a disciplined approach and evaluating a reduction in our near term utilization rate to better align our production with market demand and support the orderly destocking of industry inventory.
-- Xu Xiaoyu, Deputy Chief Executive Officer

3. Expansion Into AI Data Center Power Infrastructure Diversifies Earnings

To hedge against volatile solar market cycles, Daqo is expanding into power equipment for artificial intelligence data centers (AIDC), such as solid-state transformers and energy storage systems. Partnering with an affiliated parent company that brings four decades of manufacturing expertise, the company expects initial revenues from this segment in 2027.

We are also diversifying beyond our core polysilicon business to reduce our exposure to solar PV sector's cyclicality by targeting the fast growing AI data center power infrastructure market.
-- Xu Xiaoyu, Deputy Chief Executive Officer

Looking Ahead

Solar market demand is stabilizing as price floors take effect, and Daqo maintains strategic flexibility with $2.06 billion in cash assets and zero debt. Low production costs across its two facilities support long-term durability during cyclical industry troughs.

As 1 of the world's lowest cost producers of high quality n-type polysilicon supported by a robust balance sheet and zero debt. We remain optimistic about the sector and are well positioned to capitalize on anticipated broader market recovery and long-term growth opportunities.
-- Xu Xiaoyu, Deputy Chief Executive Officer

Management is evaluating potential stock repurchases while observing regulatory enforcement and peer output cuts. Operational focus remains on digital automation to optimize unit costs.

We will continue to sharpen our competitive edge by ramping high-efficiency N-type technology and using digital transformation and AI adoption to optimize cost.
-- Xu Xiaoyu, Deputy Chief Executive Officer

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