Daqo New Energy Q3 Revenue More Than Triples as Loss Narrows

Daqo New Energy Corp. (DQ) reported a sharp sequential increase in third-quarter revenue and a narrower loss as polysilicon shipments more than tripled from the previous quarter. The improvement came as the company adopted a more market-oriented sales strategy, reduced production costs and benefited from a modest recovery in selling prices, though prices remained below total production cost and industry demand stayed weak.

Revenue rose to $194.2 million in the third quarter of 2026 from $62.7 million in the second quarter, supported by polysilicon sales volume of 46,910 metric tons, up from 15,190 MT. Compared with the same period a year earlier, revenue declined from $244.6 million.

The gross loss narrowed to $60.6 million from $82.7 million sequentially, while gross margin improved to negative 31.2% from negative 132.0%. Daqo recorded a net loss attributable to shareholders of $52.9 million, or $0.78 per basic American Depositary Share, compared with a loss of $81.2 million, or $1.20 per ADS, in the second quarter. One ADS represents five ordinary shares.

Non-GAAP adjusted net loss attributable to shareholders was also $52.9 million, or $0.78 per basic ADS. Non-GAAP EBITDA was negative $9.2 million, compared with negative $29.3 million in the prior quarter, and the EBITDA margin was negative 4.7%, versus negative 46.8%.

Year over year, profitability remained under pressure. Daqo had reported a $9.7 million gross profit and net loss attributable to shareholders of $14.9 million in the third quarter of 2025. Non-GAAP EBITDA in that period was positive $45.8 million.

Shipments rise as costs reach record lows

Polysilicon production increased to 53,469 MT from 43,675 MT in the second quarter, exceeding Daqo’s guidance range of 40,000 MT to 45,000 MT. Nameplate capacity utilization was approximately 70% during the period.

Management attributed the higher sales volume to a shift in June from a wait-and-see position to a more market-oriented sales and pricing strategy. The company also said the increase reflected customer confidence in its product quality.

Average selling price rose 2% sequentially to $4.12 per kilogram from $4.04. Daqo said the increase lagged the broader polysilicon price recovery because third-quarter shipments included orders signed before late July.

Average total production cost fell 9.7% to a record low of $5.37 per kilogram, while average cash cost declined 7.4% to a record low of $4.23. Despite those reductions, the average selling price remained below both measures, continuing to weigh on margins.

Daqo said anti-involution policies and enforcement against below-cost sales supported a recovery in the sector during the quarter. N-type polysilicon prices increased from RMB30.5 to RMB33 per kilogram at their second-quarter low to about RMB40 to RMB43 by the end of September. However, downstream companies continued to hold inventories and generally limited purchases to immediate operating needs, keeping trading volumes subdued.

Production outlook reflects cautious market approach

Daqo expects fourth-quarter polysilicon production of approximately 35,000 MT to 45,000 MT. Full-year 2026 production is projected at 175,000 MT to 185,000 MT.

The company is evaluating a near-term reduction in utilization to align output with market demand and support an orderly reduction in industry inventories. Management cautioned that elevated inventories and weak near-term demand continued to create a challenging operating environment despite the policy support for pricing discipline.

Daqo’s aggregate cash, short-term investments, bank notes receivable, held-to-maturity investments and fixed-term bank deposits totaled $2.06 billion at the end of the quarter, up from $1.92 billion at the end of June. Management said the company maintained zero debt. Inventories increased to $392.1 million from $363.5 million sequentially and $121.4 million a year earlier.

For the first nine months of 2026, net cash used in operating activities was $215 million, compared with $50 million in the corresponding 2025 period. The nine-month net loss was $307.1 million, versus $206.2 million a year earlier.

Expansion into AI data-center power infrastructure

Beyond polysilicon, Daqo is pursuing an expansion into power infrastructure for artificial-intelligence data centers as part of an effort to reduce its exposure to the solar industry’s cyclicality. Under an investment agreement announced June 3, the company plans to establish a manufacturing base for the research, development, production and sale of next-generation energy products, including energy-storage systems, solid-state transformers and solid-state circuit breakers.

The platform is anchored by Daqo Group, an affiliated company under common beneficial ownership with Daqo New Energy. Management said it intends to pursue the expansion in a disciplined manner while preserving balance-sheet strength.

Daqo identified continued weakness in near-term polysilicon demand and high industry inventories as key operating constraints. Its forward-looking plans also remain exposed to changes in global polysilicon supply and demand, photovoltaic technology, production costs, government incentives, and the political and regulatory environment.