Hello everyone, I'm Jessie 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 first quarter of 2026, 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.

Our Chairman and CEO, Mr. Xiang Xu, is on a business trip now, Ms.

Anita Xu will deliver our management remarks on behalf of Mr. Xiang 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.

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. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements.

Further information regarding this 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 view as of today and may be subject to change.

Our ability to achieve these projections is subject to risks and uncertainties. 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.

Also, 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 these translations into U.S.

dollars solely for the convenience of the audience. Now, I will turn the call to our Deputy CEO, Ms.

Anita Xu. Ms.

Xu, please go ahead.

Thank you, Jessie. Hello everyone, this is Anita.

I'll now deliver our management remarks on behalf of our CEO, Mr. Xu.

In the first quarter of 2026, market sentiment across the solar PV industry remained cautious amidst seasonal softness and elevated inventory levels. It was further exacerbated by rising module prices driven by higher silver, aluminum, and glass costs, which led to a market slowdown in China.

Geopolitical tensions in the Middle East also weighed on end-market demand in the region. Against this backdrop, persistent industry overcapacity continued to exert downward pressure on polysilicon prices, resulting in quarterly operating and net losses.

Notwithstanding these headwinds, we continue to maintain a robust and healthy balance sheet with zero debt. As of March 31st, 2026, we held a cash balance of $559.4 million, short-term investments of $288.3 million, bank notes receivable of $20.8 million, held-to-maturity investment of $50.3 million, and a fixed-term bank deposit balance of $1.1 billion.

In total, these assets that can be converted into cash stood at $2 billion, providing us with ample liquidity. This solid financial position gives us the confidence and strategic flexibility to navigate the current market downturn.

On the operational front, we continue to take proactive measures to navigate challenging market conditions and weak selling prices, with nameplate capacity utilization rate operating at approximately 57%. Total production volume at our two polysilicon facilities was 43,402 metric tons for the quarter, exceeding our guidance range of 35,000 metric tons to 40,000 metric tons.

With market prices for polysilicon experiencing a notable decline to be below production costs during the quarter, we adhered to the Chinese authority's self-regulation guidelines by declining to engage in below-cost sales. We adopted a disciplined wait-and-see approach, pending further implementation of the national anti-involution policies we highlighted last quarter.

As a result, our sales volume dropped to 4,482 metric tons, while average selling price increased 2.3% sequentially to $5.96 per kilogram. On the cost side, total production and cash costs increased marginally by 2% and 3% respectively on a sequential basis, primarily driven by exchange rate movements.

However, despite higher silicon metal costs, manufacturing costs in RMB terms actually declined slightly on a sequential basis, reflecting our continuing improvements in manufacturing efficiency. In light of the current market dynamics, we expect total polysilicon production volume in the second quarter of 2026 to be approximately 35,000 metric tons to 40,000 metric tons.

For the full year of 2026, we expect production volume to remain in the range of 140,000 to 170,000 metric tons. With the solar market impacted by seasonality surrounding the Chinese New Year holidays and the absence of concrete updates on capacity rationalization policies, polysilicon transactions and shipment volumes remained low during the quarter.

N-type polysilicon prices dropped from 48 to 55 RMB per kilogram at the end of 2025 to 35 to 37 RMB per kilogram by the end of the first quarter. However, polysilicon prices heading into the second quarter are showing signs of bottoming out, with weekly declines gradually easing.

While producers await clearer guidelines from authorities to tackle overcapacity, a weak demand outlook, industry inventory buildup, and financial pressure forced several peers to adjust their pricing strategies toward a more market-oriented approach. As a result, industry-level polysilicon monthly supply fell to approximately 93,000 metric tons during the quarter, representing an industry average utilization rate of just 39%.

Looking ahead, we expect government authorities to strengthen the anti-involution policies necessary to address these industry-wide overcapacity issues. As an encouraging move, on April 17th, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the State Administration for Market Regulation, the National Energy Administration, and other key national departments jointly held a symposium on regulating market competition within the solar PV sector, reinforcing the urgent need to address irrational competition and curb destructive involution.

Additionally, all relevant authorities are now required to deploy concerted measures to strengthen industry governance and promote the high-quality development of the solar PV industry, including in respect of capacity regulation, standards guidance,

Thank you. Sorry, apologies.

My line got disconnected. Continuing with the April 17th symposium, all relevant authorities are now required to deploy concerted measures to strengthen industry governance and promote the high-quality development of the solar PV industry, including in respect of capacity regulation, standards guidance, innovation-driven development, price law enforcement, quality supervision, mergers and acquisitions, and intellectual property rights protection.

More broadly, the solar PV industry continues to exhibit compelling long-term growth prospects. Growing vulnerabilities in global energy markets have sparked widespread concerns about national energy security, in which the solar PV and renewable energy sectors can play a crucial role.

As one of the world's lowest-cost producers of the highest-quality N-type polysilicon, backed by a robust balance sheet and zero debt, we remain optimistic about the sector and are well-positioned to capitalize on the anticipated market recovery and long-term growth opportunities. We'll continue to strengthen our competitive edge through advancements in high-efficiency N-type technologies and cost optimization via digital transformation and AI adoption.

As the world accelerates its transition to clean energy, we are confident in our ability to play a leading role in shaping that 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.

Thank you, Anita, and 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 first quarter 2026 financial performance.

Revenues were $26.7 million, compared to $221.7 million in the fourth quarter of 2025 and $124 million in the first quarter of 2025. The decrease in revenue compared to the fourth quarter of 2025 was primarily due to a decrease in sales volume, as the company reduced sales in light of the relatively low selling prices.

Gross loss was $139.4 million, compared to a gross profit of $15.4 million in the fourth quarter of 2025 and gross loss of $81.5 million in the first quarter of 2025. Gross margin was negative 521%, compared to 7% in the fourth quarter of 2025 and negative 65.8% in the first quarter of 2025.

The decrease in gross margin compared to the fourth quarter of 2025 was primarily due to an increase in provision for inventory impairment. Cost of revenue for the first quarter of 2026 includes $98.4 million of provisions for inventory impairment due to end end-of-quarter market polysilicon pricing that is below production costs.

Selling, general, and administrative expenses were $12.2 million, compared to $18.7 million in the fourth quarter of 2025 and $35 million in the first quarter of 2025. The sequential decrease of SG&A expense was primarily due to lower sales volume in the first quarter of 2026.

The year-over-year decrease was also due to the company recognizing $18.6 million in non-cash share-based compensation cost related to the company's share incentive plan in the first quarter of 2025. R&D expenses were $0.8 million, compared to $0.7 million in the fourth quarter of 2025 and $0.5 million in the first quarter of 2025.

R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter. Loss from operations was $150.8 million, compared to $20.9 million in the fourth quarter of 2025 and $114 million in the first quarter of 2025.

Operating margin was negative 564%, compared to negative 9.4% in the fourth quarter of 2025 and negative 92% in the first quarter of 2025. Net loss attributable to Daqo New Energy shareholders was $88.4 million, compared to $7.3 million in the fourth quarter of 2025 and $71.8 million in the first quarter of 2025.

Loss per basic ADS was $1.31, compared to 11 loss 11 cents in the fourth quarter of 2025 and $1.07 in the first quarter of 2025. Adjusted net loss attributable to Daqo New Energy shareholders, excluding non-cash share-based compensation costs, was $88.4 million, compared to $7.3 million in the fourth quarter of 2025 and $53.2 million in the first quarter of 2025.

Adjusted loss per basic ADS was $1.31, compared to 11 cents in the fourth quarter of 2025 and 80 cents in the first quarter of 2025. EBITDA was a negative $83 million, compared to $52.5 million in the fourth quarter of 2025 and negative $48 million in the first quarter of 2025.

EBITDA margin was negative 311%, compared to 23.7% in the fourth quarter of 2025 and negative 39% in the first quarter of 2025. Now on the company's financial condition.

As of March 31st, 2026, the company had $559.4 million in cash, cash equivalents, and restrict restricted cash, compared to $980 million as of December 31st, 2025, and $792 million as of March 31st, 2025. As of March 31st, 2026, short-term investments was $288 million, compared to $114 million as of December 31st, 2025, and $168 million as of March 31st, 2025.

As of March 31st, 2026, the notes receivable balance was $20.8 million, compared to $135.5 million as of December 31st, 2025, and $62.7 million as of March 31st, 2025. Notes receivables represent bank notes with maturity within 6 months.

As of March 31st, 2026, held-to-maturity investment was $50.3 million, compared to nil as of December 31st, 2025, and nil as of March 31st, 2025. As of March 31st, 2026, the balance of fixed-term deposit within 1 year was $1 billion, compared to $900 $972 million as of December 31st, 2025, and $1.1 billion as of March 31st, 2025.

Now the company's cash flow. For the 3 months ended March 31st, 2026, net cash used in operating activities was $147.5 million, compared to $38.9 million in the same period of 2025.

For the 3 months ended March 31st, 2026, net cash used in investing activities was $275.8 million, compared to 2 $211 million in the same period of 2025. Net cash used in investing activities in 2026 was primarily due to the purchase of short-term investments and fixed-term deposits.

For the 3 months ended March 31st, 2026, net cash used in financing activities was $7.8 million, compared to nil in the same period of 2025. Net cash used in financing activities in the first quarter of 2026 was related to the repurchase of shares share repurchases made by the company's subsidiary Xinjiang Daqo from its minority shareholders.

That concludes our prepared remarks. We will now open the call to Q&A from the audience.

Operator, please begin.

Hey guys, thanks for taking my questions. First one is on the State Administration for Market Regulation.

Tier 1 manufacturers submitted formal correction proposals. Can you walk us through how these specific proposals are practically shifting or may practically shift competitive dynamics on the ground today?

Ultimately, do these commitments accelerate or delay the necessary industry consolidation needed to stabilize ASPs? Thanks, guys.

Sorry Phil, you're kind of breaking up on our end. Can you repeat your question?

Sure. Hey Ming.

Just wanted to understand what the submissions to the State Administration for Market Regulation, those proposals, how could they practically improve the competitive dynamics to accelerate or delay the necessary industry consolidation needed to stabilize ASPs?

Anita, do you want to start first, and I can add to that? Or let me just start.

Our understanding is, I think that the government, especially at the most recent industry meeting with the Ministry of Industry and Information Technology, and NDRC, and NEA, and then the market regulation agency. Basically, there is a consensus from the government that, at the minimum, while maintaining some market competition, there's a need to enforce the price law.

Now there is some details to be determined in terms of, for example, how to measure cost for all the different manufacturers. Our understanding is they're doing a new round of price determination.

This should come out, I'd say, in the next 2 months or so, our understanding is around mid-year. Once that new cost determination is being done, and then there will be a renewed guidance on where the minimum price would be.

Then at the same time, we're still monitoring in terms of how the enforcement can be done. There may be some enforcement actions that's being discussed, but that hasn't taken place yet.

At least for us, right, we're in a observation mode in terms of whether enforcement happens. If there's no enforcement, then we maybe need to sell at wherever the market is, right?

At least right now, we're enforcing the price on this in our sales efforts, right? Obviously that's having a negative impact on our sales volume, right?

We're waiting for that to happen. Our expectation is that once the new cost determination comes out and manufacturers are now required to sell above production costs, and then the market price should recover.

That's

at least our Yeah.

Okay. Thanks, Ming.

In terms of enforcement actions, what could that look like? What kind of timing could that be?

Do you think the probability of enforcement action is higher or lower, more like greater than 50% or less than 50%? Thanks.

Okay. Our understanding is, rather than depending on the company's own reported costs, right, the government is trying to have a cost model that is consistent across all the manufacturers, right, where, in terms of material costs, depreciation, labor, and things like that, right?

Once that is done, then we don't know if it's going to be one general price or there could be different price for manufacturers. That's to be determined.

Once that is done, then I think there will be enforcement or at least they will communicate how enforcement would be done. Previously, right, this would be in the form of fairly significant penalty or in the worst case scenario, they could revoke your manufacturing license or shut down your electricity.

There are many ways that the government could enforce. We're yet to see that right now.

Got it. Then final question for me.

Given all that, and with the reality is you guys still need to operate and participate in the market. What do you think is a practical outlook for ASPs for Q2, Q3, and what do you think your utilization rate might be in those quarters?

Okay. For Q2, then it will be optimistic, right?

Cash price is kind of in the 35 to 37 range. I think some producers, if they have cash issues, they might sell a little bit discount to that.

Then there are opportunities in the futures market, for example, where you might be able to sell a little bit higher, maybe in the 38 to 41 RMB range, depending on the contract period. We're looking at that as well.

Let's say if there's no price guidance and enforcement action, I think then the price range is maybe 35 to 40. If price guidance does come out, it should be in the range of 40 to 45, or maybe even higher.

These are inclusive of VATs.

Okay.

Yeah. Thank you.

Great. Then

the utilization rate, do you have a sense for Q2 and 3 yet? Thanks.

For us or for the industry?

For

us. It will be at roughly 50% to 55%, yeah.

We're maintaining utilization for now, because we're kind of at a fairly optimal operating condition in terms of both quality and cost and production volume. Adjustments will generally, our experience is will bring short-term volatility to both quality and cost.

At least we're in the short term, and then we're maintaining the current production level. Obviously, if either the new post price guidance or enforcement, if it stays below expectation, below what we would expect and price remain low, then we would make further adjustments in the second half.

It's subject to demand environment as well. Q1 was a really fairly negative demand environment overall, I'd say.

Ming, thanks very much. I'll pass it on.

Great, thank you.

Thanks for taking my question. I think in terms of the sales volume and the revenue in first quarter is a bit of a surprise.

Would like to know if I do the math and back the ASP in first quarter, it seems to be at around 41 to 42. Ex-VAT.

Does it mean that the company didn't sell anything maybe after February?

I think that is the right way to look at this. We did sell a volume in January in the high 40s inclusive of VAT, right, I think.

Actually our Q1 recognized ASP is higher than Q4, while if you look at market ASP is actually, on average, is much lower than Q4. I think that the big change is really around Chinese New Year, especially after Chinese New Year, where the new policy from the State Administration of Market Regulators was that the anti-involution policy that was counted on previously to reduce capacity and enforce price was kind of disrupted, right?

That's when we started to see price to come down fairly quickly and significantly, right? Once price fell below production cost, then we stopped selling to the market.

The market generally, in the first quarter, really can be characterized by fairly high uncertainty. Right, you have a number of things happening: the war in the Middle East, high silver prices, right, that led to a lot of uncertainty for the downstream, actually, where they were seeing fairly significant increase in their production costs.

At the same time, it was difficult for them to pass through all that increase while that's having a fairly negative impact to the Chinese end market as well. These combined really led to a fairly low industry transaction volume for polysilicon in the first quarter.

Just to follow up, I recall before March

Let me quickly add.

Sorry.

Anita, go ahead.

Oh no, I was just going to say let me add a little bit more to that. In terms of the industry-level inventory, it has accumulated to a relatively high level.

I would say, in the first quarter, it has been above 500,000 metric tons, and it's now nearly 600,000 metric tons. I would say Tier 1 manufacturers held roughly at least a 3 month of stock.

That's why that led to a wait-and-see attitude from the downstream buyers. For us especially, we wanted to adhere to the Chinese authority's self-regulation guidelines.

We were relatively reluctant to engage in below-cost sales. We took this wait-and-see approach to see further implementation from the national policies level.

Understood. Sorry, how much did the Tier 1 producers are holding in terms of inventory?

Is it 500,000?

In total? The

total is 500,000? How much is in Tier 1?

Around that. Including the downstreams as well.

Oh, including wafer players, okay.

Total in polysilicon is greater.

I recall actually in January and February, actually demand was quite good because downstream players are having a rush export because to catch the VAT deadline. Wonder why the company didn't sell more in January or February maybe?

Because 4,000 tons seems to be just 10% of the production, right?

Okay. I think let me add more color and then maybe Anita can feel free to add more.

I think what happened was there's fairly strong demand for the modules, especially for the European market. What happened was these integrated manufacturers especially were selling mostly their existing inventory of modules, and then they were also producing, but primarily, I would call it, using their own inventory, right?

They had some inventory of poly and materials. I think the uncertainty in cost actually, especially after Chinese New Year, led them to really kind of hold off or delay their procurement of polysilicon, I think because of, especially uncertainty related to demand after April 1st, right?

Then with the war, that made the things even a little bit worse. Yeah.

I would say the market probably had reasonable amount of transactions in January, but really February and March was lower. Then you have this expectation of falling prices, especially for polysilicon because of the client's inventory issues.

That made it even call it even worse, a little bit worse in terms of the customers, right, they buy when prices are rising, but they delay purchase when prices are falling.

Understood. In terms of the price outlook, I think just want to have a follow-up on Phil's question.

Approximately when you think there will be a guideline coming from the authority? When do you think, is it within a month or a quarter that price will start to rebound, or what is the timeline there?

Is there regular meetings with the authority to discuss the details on the enforcement, or what is the status now?

Our understanding is it should be around June. Then right now, they're redoing the cost model for all the different producers.

Then trying to make an alignment. Once that cost determination is done, and then the next step would be updated price guidance.

Understood. To my understanding, that will be more like an enforcement of the price law, which means everyone should sell above their cost.

The previous acquisition incentives is it basically rejected or it's still, yeah, or it's still likely, or any updates on that?

There's no updates to that as of now. There's no new guidance on that.

They don't stay, you can't do

I think we're open to different Yeah. I would say we're open to different kinds of proposals, but we're not 100% sure how that might unfold.

We're engaging in conversations now to discover or to test different sorts of solutions. Anything that would benefit the industry as a whole and for manufacturers as well, we're willing to try it out, or at least try to come to a solution with concerted efforts toward that.

I would say that the general policy is the government is positive and promoting mergers and acquisition to call it for more consolidation, right? In terms of how that might lead to actual policies or actions, that's still yet to be seen.

Understood. Wonder if you are seeing any uptick of demand recently, because demand, I think, was quite poor in past couple of months.

Wonder if you are seeing any recovery in demand?

I would say, on the module side and end market, suddenly right now, Q2 is actually trending to look better than Q1. We shall see.

Then definitely, I think downstream inventory is coming down. That's also a good sign.

Understood. Poly prices are also bottoming too.

Would like to know if the company, because the sales was very low at first quarter, not sure if the strategy is the same in second quarter. If that's the case, then would like to know if has the company considered maintaining an even lower utilization rate?

Because the company was also running at more than 50%, but I recall company used to be running at 30%. Any consideration behind that, running the utilization rate at a relatively high level?

I would say that the general framework for the company is we're monitoring the developments of the price law especially. If the companies do, right, follow the price law and all are required to sell above production costs, and we're fairly confident on where we are in terms of industry positioning, right, and then we should regain market share.

That will be a function of demand as well. If that's the case, then we might maintain the current utilization level.

Let's say if it turns out to be more negative in terms of especially if prices remain where it is right now, then we would consider a lower utilization rate.

Understood. I'll stop and pass.

Thank you for taking my question,

Anita and Ming. Okay.

Thanks Alan.

Hey, hello, thanks for taking my question. My question is about utilization as well.

My understanding now is that our current strategy is to maintain over 50% utilization and stop selling to external customers at below cost pricing, right? This is based on the assumption of potential further regulation to drive poly price higher to 40 RMB per kilo and above.

Is that correct?

That's generally the right thinking. Yeah.

It's kind of a scenario, right? The two major scenarios: where if the government does what it says, right, enforce price law, right, penalties and all that, and then have the manufacturer sell above cost, then we would maintain at the current utilization.

On the other hand, if unfortunately price law isn't being enforced for whatever reason, right, and then manufacturers continue to sell below cost, then we will lower our utilization.

If we assume a scenario like no policy kicking in, and pricing is likely to stay at the current level, then what's our sales strategy and production strategy in 2Q and in second half? Say, is there any guidance on the utilization rate in this scenario?

On top of that utilization guidance, will we follow the rest of the industry to sell product at below cost pricing, or we will continue to stop selling at the lower pricing level and continue to pile up the inventory and then wait for the sector turnaround?

Okay. Right, if we assume, right, the government, despite all their rhetoric, nothing happens, right?

I think that's unlikely because there's a lot of pressure on MIIT right now as well. If let's assume that happens, and then obviously we would lower our utilization and then start to sell at close to market pricing, right?

Whatever it takes to move volume. Then we would compete with our peers, right?

Then obviously we have a strong balance sheet, we expect we would be one of the last survivors, if not the last survivor. Right, and then we would actually, in say 2 or 3 years, we will see fairly significant exits of the industry, where then we have a market-based, call it, capacity exit or consolidation, right?

Then the company will do fairly well after that. It's a trade-off.

Yeah.

That's clear. I recall you just mentioned you expect the policy will kick in in June, and that's the month where we would expect a potential price hike.

If to reconcile your expectations, can we assume we will keep utilization at 50% above till June, and then start selling at close to market pricing if no policy kicking in?

I think that's the right assumption, yes. If there's no policy, right, price remain low, then we would be at a reduced utilization.

If the government does enforce price law, right, and then we would maintain at least the current utilization.

June is the month we are waiting for any policy to kick in, right? If not,

we will

switch our strategy.

I think in terms of communication with the government. Yeah.

Go ahead Anita.

Oh, no worries. No, it's fine.

Our understanding is June is the timeline of the new government policy.

Sure, that's clear. My final question is about cash cost.

Is there any guidance about our cash cost in second quarter and in the second half of 2026?

I think based on our current utilization production level and the current silicon metal cost and material costs, for example, we're expecting our cash cost to be in line with Q2 in terms of RMB terms, and trending slightly lower over the next quarters. A fairly steady cost structure.

Sure. Thanks, that's all from me.

I will pass it on. Thank you.

Thank you.

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 a awesome day. Goodbye.