DAQO New Energy (NYSE:DQ) executives said the company benefited from a late-2025 rebound in polysilicon pricing and ongoing cost-reduction efforts, helping narrow losses and improve cash generation as China’s solar industry moved toward tighter oversight aimed at curbing “irrational competition” and overcapacity.
Market backdrop and operating trends
Deputy CEO Anita Xu said China’s “N-type Revolution Initiative” supported the solar PV industry’s gradual emergence from a cyclical downturn in 2025, with solar product market prices rebounding from the third quarter and polysilicon “posting the most notable gains.” Daqo’s utilization rate rose through the year, increasing from 33% in the first quarter to 55% in the fourth quarter.
In the fourth quarter, polysilicon production was 42,181 metric tons, within guidance of 39,500 to 42,500 metric tons, while sales volume totaled 38,167 metric tons. The company continued to manage output amid oversupply, operating at 55% utilization during the quarter.
Costs, pricing, and margin drivers
Management emphasized cost improvements. Xu said total production costs declined 9% sequentially to $5.83 per kilogram in Q4 2025 from $6.38 per kilogram in Q3, citing process improvements, manufacturing efficiency gains, and raw material cost optimization. Idle facility-related costs fell to $0.74 per kilogram from $1.18 per kilogram, driven by higher production levels. Daqo’s cash costs decreased 2% to a “new record low” of $4.46 per kilogram in Q4, from $4.54 per kilogram in Q3.
On pricing, Xu said full-year polysilicon average selling prices (ASPs) declined to $5.25 per kilogram in 2025 from $5.66 per kilogram in 2024. During Q&A, management repeatedly referenced expectations that prices should not fall below industry-level cost under the direction of China’s evolving pricing framework, with Xu indicating a “lower bound” of roughly RMB 53–54 per kilogram for coming quarters, while noting that the pace of consolidation could influence future pricing.
CFO Ming Yang addressed a question about Q4 ASPs appearing below spot prices, attributing it to product mix during a production ramp. He said initial batches from the ramp had lower quality that led to a market discount, and that quality normalized by December, which management said should help ASPs be more stable relative to spot price movements going forward.
Fourth-quarter results: revenue down sequentially, profitability improved
Yang reported fourth-quarter revenue of $221.7 million, down from $244.6 million in Q3 2025 but up from $195.4 million in Q4 2024. The sequential decline was attributed primarily to lower sales volume.
Gross profit was $15.4 million, compared with $9.7 million in Q3 2025 and a gross loss of $65.3 million in Q4 2024. Gross margin improved to 7% from 3.9% in Q3 and -33% in the year-ago quarter, driven mainly by lower production costs, Yang said.
Selling, general, and administrative expenses were $18.7 million, down from $32.3 million in Q3, primarily because non-cash share-based compensation was zero in Q4 versus $18.6 million in Q3. The company recorded $19.3 million of non-cash expense for an allowance for credit loss, which Yang said was tied to uncertainty in recovering long-outstanding “other receivables” related to funds lent during early development of the Inner Mongolia project to a local government-affiliated industrial park entity. Repayment was delayed due to the industry downturn and reduced local tax revenue, and Yang said the amounts due were fully reserved and that the company does not expect additional related allowance going forward.
Operating loss was $20.9 million, compared with $20.3 million in Q3 and $300 million in Q4 2024. Net loss attributable to shareholders narrowed to $7.3 million from $14.9 million in Q3 and $180 million in Q4 2024. EBITDA was $52.0 million in Q4, up from $45.8 million in Q3 and compared with -$235 million in Q4 2024.
Full-year 2025: narrower net loss and improved cash flow
For 2025, revenue was $665 million, down from $1.03 billion in 2024, reflecting lower sales volume and lower ASPs. Gross loss was $137.9 million versus $212.9 million in 2024, while gross margin was -20.7%, unchanged from 2024, according to Yang.
Operating loss improved to $270 million from $564 million in 2024, and net loss attributable to shareholders was $170.5 million, compared to $345 million in 2024. EBITDA swung to positive $1.7 million, versus -$337 million in 2024. Management also highlighted improved cash generation: Yang reported net cash provided by operating activities of $56.1 million for 2025, compared with a $435 million outflow in 2024.
On liquidity, management said the company ended 2025 with a substantial pool of liquid assets. Xu cited cash of $980 million, short-term investments of $114 million, bank notes receivable of $136 million, and fixed-term bank deposits of about $1.0 billion, totaling $2.27 billion in highly liquid assets. Yang provided balance sheet figures showing cash and restricted cash of $980 million at year-end, short-term investments of $114 million, notes receivable of $135.5 million, and time deposits within one year of $972.4 million.
Outlook: production guidance, capex, and policy focus
Daqo guided for first-quarter 2026 polysilicon production of approximately 35,000 to 40,000 metric tons and full-year 2026 production of 140,000 to 170,000 metric tons. Yang said the company expects 2026 capital expenditures of approximately $100 million to $150 million, primarily for remaining payments related to the Inner Mongolia project and maintenance capex.
Executives spent significant time discussing China’s “anti-involution” initiative to address overcapacity and pricing practices. Xu said authorities are deploying measures including standards, guidance, quality supervision, price enforcement, and promotion of technological progress, including revisions to the Anti-Unfair Competition Law and draft amendments to the Pricing Law that “mandate that sales shall not be below cost.” She also cited a drafted mandatory national standard on energy consumption limits per unit of polysilicon output. Xu said 2025 industry polysilicon production fell 28.4% to 1.32 million metric tons and prices rose more than 50% from mid-2025 lows to RMB 50–56 per kilogram by year-end.
Asked about buybacks, Xu said repurchases remain under consideration but the company is taking a “wait-and-see” approach until there is more clarity on policy implementation and outcomes. On consolidation, management said an SPV for consolidation was established in December 2025 and that discussions are ongoing, with a phased approach that could include near-term investment injections followed by gradual consolidation “over a couple years.”
On free cash flow, Yang said the company expects improvement in 2026, citing steadier expectations for volume and ASP and stable-to-lower costs, while declining to provide a specific figure.
About DAQO New Energy (NYSE:DQ)
DAQO New Energy Corp. operates as a leading manufacturer of high-purity polysilicon and monocrystalline silicon wafers for the global solar photovoltaic industry. The company focuses on serving module makers and integrated solar producers with critical upstream materials, applying proprietary technologies and optimized processes to achieve high product purity and consistently low production costs. Its core offerings include solar-grade polysilicon—used in the ingot casting and wafer slicing stages—and premium mono-silicon wafers, which are a key input for high-efficiency solar cell production.
Founded in the late 2000s and listed on the New York Stock Exchange in 2010, DAQO New Energy established its first polysilicon facility in China’s Xinjiang Uygur Autonomous Region.
