Key Highlights

  • Daqo New Energy reported third quarter revenue of USD 194.2 million, up sharply from USD 62.7 million in the second quarter.
  • Net loss narrowed to USD 52.9 million, or USD 0.78 per basic ADS, from a net loss of USD 81.2 million in the prior quarter.
  • Polysilicon sales volume rose to 46.9 thousand metric tons from 15.2 thousand metric tons in the second quarter.
  • The company guided fourth quarter polysilicon production to a range of 35 thousand to 45 thousand metric tons.

Shipment Volumes Triple as Pricing Strategy Shifts

Daqo New Energy (NYSE:DQ) reported third quarter revenue of USD 194.2 million, compared with USD 62.7 million in the second quarter of 2026 and USD 245 million in the third quarter of 2025. The sequential increase followed the company's shift in June from a wait and see sales approach to a more market oriented pricing strategy, which drove polysilicon sales volume to 46.9 thousand metric tons from 15.2 thousand metric tons in the prior quarter.

Polysilicon production volume was 53.5 thousand metric tons, exceeding the company's guidance range of 50 thousand to 55 thousand metric tons. Average selling price rose 2% sequentially to USD 4.12 per kilogram, though the increase lagged the broader market recovery because third quarter shipments fulfilled orders signed before late July.

Production Costs Reach Record Lows

Gross margin was negative 31% for the quarter, an improvement from negative 132% in the second quarter, reflecting higher selling prices and lower production costs. Average total production cost fell 9.7% sequentially to a record USD 5.37 per kilogram, while average cash cost declined 7.4% to USD 4.23 per kilogram, improvements the company attributed to manufacturing efficiency gains and lower energy usage.

Net loss narrowed to USD 52.9 million, or USD 0.78 per basic American depositary share, from a net loss of USD 81.2 million, or USD 1.20 per basic ADS, in the second quarter. The company held total liquidity of USD 2.06 billion as of September 30, 2026, including cash, restricted cash, short term investments and fixed term bank deposits, with zero debt on its balance sheet.

Production Guidance and Diversification Efforts

The company guided fourth quarter polysilicon production to a range of 35 thousand to 45 thousand metric tons, reflecting a potential reduction in utilization to align output with market demand, with full year 2026 production guidance set at 175 thousand to 185 thousand metric tons. Industry wide polysilicon and wafer inventory stood at approximately 700 thousand metric tons, a level the company said continues to weigh on near term demand.

The company is investing in manufacturing capacity for AI data center power infrastructure, including energy storage systems and solid state components, with construction already underway and sales targeted for the first half of 2027. This diversification effort is intended to reduce the company's exposure to the cyclicality of the solar photovoltaic sector.

Production and Policy Factors to Watch

The pace of industry wide destocking relative to the approximately 700 thousand metric tons of current inventory, continued polysilicon pricing trends following recent regulatory guidance on low cost sales, and progress on the company's AI data center power infrastructure investment are among the items the company has flagged for coming quarters. Fourth quarter production relative to the guided 35 thousand to 45 thousand metric ton range is a specific data point tied to the current demand environment.