With an asset-liability ratio of only 7.87%, Daqo New Energy released its semi-annual report, recording a net loss of 1.6 billion yuan and staking 6 billion yuan on AIDC. The most conservative leading photovoltaic enterprise has placed a big bet.
Daqo Energy, a leading polysilicon producer, has recorded consecutive losses in its core business and plans to invest 6 billion yuan to expand into the AIDC power distribution sector.
Energy Insight learned that Daqo Energy released its 2026 semi-annual report on August 21, 2026.
This leading polysilicon producer has no interest-bearing liabilities on its books, with an asset-liability ratio of only 7.87%. While its peers are overwhelmed by debt pressures, the father-son team of Xu Guangfu and Xu Xiang has pushed the financial safety cushion to the extreme.
However, another set of data is far less optimistic: it posted a net loss of 1.595 billion yuan in the first half of the year, with a net outflow of operating cash flow of 2.243 billion yuan. Calculated from the second quarter of 2024, it has lost more than 5 billion yuan in two years. Over the past 9 quarters, except for a meager profit of 70 million yuan in the third quarter of 2025, it has registered losses in the other 8 quarters.
The most confusing point is that at the critical moment when its core business is bleeding heavily, Daqo announced that it will invest 6 billion yuan to expand into the AIDC power distribution equipment sector, covering everything from solid-state transformers to solid-state batteries.
As soon as the news came out, its share price hit the 20% daily limit directly. A company that "never borrows money" and whose cash on the books is being continuously consumed by its core business is betting on a completely unfamiliar track. Is this a desperate gamble driven to the end of the road, or a carefully calculated foreshadowing?
01
10.4 Billion Yuan Lying On Its Books
But Bleeding Cash Every Quarter
Daqo Energy's balance sheet can be regarded as a "maverick" in the photovoltaic industry.
By the end of June 2026, the company's total capital reserves including monetary funds, trading financial assets and time deposits amounted to 10.419 billion yuan, with an asset-liability ratio of only 7.87% and no interest-bearing liabilities at all. For horizontal comparison: In 2025, the asset-liability ratio of Xinte Energy was about 55%, that of GCL Technology was about 37%, and that of Hesheng Silicon Industry was about 65%.
In other words, while peers are all borrowing to survive the industry cycle, Daqo is like a master who locks all its money in a safe and never lets anyone touch it.
But the problem is that this sum of money is being consumed at a speed visible to the naked eye.
In 2023, Daqo Energy was still making huge profits, with an annual profit of 5.763 billion yuan. The following year, the polysilicon industry took a sharp downturn, resulting in a net loss of 2.718 billion yuan for the whole year. In 2025, it tried to narrow losses by cutting production and reducing costs, but still recorded a net loss of 1.129 billion yuan. In 2026, the situation is even more severe: it lost 801 million yuan in the first quarter, and the cumulative loss in the first half of the year reached 1.595 billion yuan.
The 10.4 billion yuan on the books seems substantial, but how long can it last at this rate of cash bleeding?
02
Output of 87,000 Tons, Only 19,700 Tons Sold
Caught Between Stopping Production and Continuing Operation
In the first half of the year, Daqo Energy produced 87,100 tons of polysilicon, with a capacity utilization rate maintained at around 57%. This means that nearly half of its production lines have been shut down.
But the more striking data is the sales volume — only 19,700 tons were sold in the first half of the year, plummeting 57.4% year on year. The first quarter was particularly extreme: the output was 43,400 tons, but the sales volume was only 4,500 tons, with a production-sales ratio of less than 10%.
It is almost as if nothing was sold.
Then why not just shut down all production completely? The reason boils down to two words: depreciation.
Polysilicon production is a typical heavy-asset industry. Costs such as equipment depreciation, production line maintenance, and labor remuneration will not disappear just because production is cut. When the price has fallen below the cash cost, shutting down production means huge depreciation losses without any revenue, leading to even greater losses.
As a result, inventories rose sharply. By the end of June 2026, Daqo Energy's inventory reached as high as 2.66 billion yuan, almost doubling compared to the beginning of the year. The company made a provision for inventory depreciation of 1.026 billion yuan based on the principle of prudence — the management itself does not expect these goods to be sold at a good price.
This forms a vicious cycle: The more you produce, the more you lose; if you stop production, you still have to deduct depreciation and lose even more; if you can't sell the products and pile them in the warehouse, you still have to make depreciation provisions.
In early August, the polysilicon market once experienced an extreme state of "zero transactions and no quoted prices". Until recently, some enterprises tentatively resumed quoting. The reference price of N-type recycled material is between 40,000 yuan and 42,000 yuan per ton, and some enterprises quoted 43,000 yuan. Compared with the beginning of the year, the price of polysilicon has fallen by more than 40%.
The entire industry is gritting its teeth and holding on.
03
Betting 6 Billion Yuan On An Unfamiliar Track
A Lifeline or A Hasty Move in Desperation?
On June 3, 2026, the Xu father and son finally could not sit still.
Daqo Energy announced in its public notice that it plans to invest in the construction of a smart energy system manufacturing base in Kunshan, focusing on AIDC power distribution equipment, covering solid-state transformers, energy storage systems, solid-state batteries, etc. The total investment of the project is about 6 billion yuan, which will be constructed in two phases.
The market reacted extremely enthusiastically — its share price hit the 20% daily limit the next day.
The logic behind this reaction is not hard to understand. The AIDC power distribution market is indeed exploding. Some institutions estimate that the power supply and distribution market will reach 730 billion yuan in 2026. As the key equipment to solve high-voltage DC power supply, improve energy efficiency and reduce PUE, the market scale of solid-state transformers is expected to expand from the 10-billion-yuan level to the 100-billion-yuan level. Compared with traditional transformers, the conversion efficiency of solid-state transformers can be increased to more than 98.5%, the volume can be reduced by 60%, and the power loss can be reduced by 40%.
It sounds very promising. But there are several problems that cannot be avoided.
First, Daqo Energy's accumulation in the polysilicon sector is chemical production experience, while the core of solid-state transformers lies in power semiconductor application, power conversion and DC power distribution control. The company claims that "the Daqo brand has the potential of technological homology in power electronics and system integration", but no one can tell how many pitfalls lie between "potential" and "actual capability".
Second, 6 billion yuan is not a small amount. Although Daqo Energy has 10.4 billion yuan of capital reserves on its books, its core business is bleeding cash every quarter. The first phase of the project alone requires an investment of 2.1 billion yuan. If the new business fails to generate returns for a long time after this sum of money is invested, and the polysilicon industry cannot wait for its turning point for a long time, how great will the cash flow pressure be?
Third, although the track is hot, the competition is equally fierce. There are already a number of players who have been deeply engaged in the AIDC power distribution equipment sector for many years. As a "newcomer", what advantages does Daqo have to grab a share of the market?
Institutional views are also seriously divided. In the past six months, 4 institutions have released research reports on Daqo Energy, predicting that the highest net profit in 2026 will be 656 million yuan, and the lowest will be a loss of 1.067 billion yuan. There is a 1.7 billion yuan gap between the highest and lowest performance forecasts for the same company. To some extent, this shows that no one can really see the future of this company clearly.
On August 6, eight leading polysilicon producers including Daqo signed an "anti-involution" initiative, promising not to sell products below cost. These eight enterprises together account for more than 90% of the domestic effective polysilicon production capacity. At the same time, three mandatory national standards for photovoltaic will be implemented on January 1, 2027, and the level 3 standard for polysilicon energy consumption is further tightened compared with the draft for comments. Huatai Securities believes that this will significantly accelerate the capacity clearance in the industry.
Policies are helping to "turn off the tap", but the speed of turning off the tap cannot catch up with the speed of water leakage in the pool.
Daqo Energy is in an awkward position: it has the cleanest balance sheet in the industry, but it is also suffering from continuous cash bleeding from its core business. On the one hand, it participates in the industry's "anti-involution" self-rescue and waits for the turning point brought about by policy-driven capacity clearance, on the other hand, it invests 6 billion yuan to chase a completely unfamiliar trend.
The 10.4 billion yuan on its books is its last confidence, and also its last bet.
The outcome of this gamble may take several years to become clear. But one thing is certain — in the cold winter of the polysilicon industry, the most conservative player has made the most bold decision.
This article is from the WeChat official account "Energy Insight", written by Zhao Jianan, and authorized for release by 36Kr.