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Daqo Unveils $1.2 Billion Price Tag For Second Phase Of Expansion

Dec. 08, 2022 4:05 AM ETDaqo New Energy Corp. (DQ)39 Comments
Bamboo Works profile picture
Bamboo Works


  • Daqo New Energy said it will spend 9.2 billion yuan to add 100,000 MT of polysilicon capacity in the second, and final, phase of a massive expansion in Inner Mongolia.
  • The expansion will triple the company’s capacity, just as polysilicon prices are showing signs of peaking and starting to fall after tripling over the last two years.
  • The only problem is that Daqo is hardly the only one hoping to tap surging global demand for solar power.

Polysilicon chips,


Polysilicon maker revealed the final phase of its massive expansion will add 100,000 MT of capacity and should start producing by the end of next year.

Bring on the polysilicon!

That’s the latest battle cry coming from Daqo

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Bamboo Works profile picture
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Comments (39)

Have you seen the agreements signed? Panel prices will go down sharply and as we have witnesed in the past demand will explode. I think they know what they are doing. They were producing 5000 mt just a few years ago.
@mvarela1980 what I don't understand is what is the bottom of this stock when their cash is over their market cap, what is the point of having this on the public market.
@hpad06 for the Co is excellent they will buyback as much as possible. Regarding the market, is irrational. people were paying billions for empty co a few month a go. They have excuses. China, labor, poly going downd. Etc erc I hold my stocks and wait for the co to buy as much as possible. The eps will be geometrical, some day wont be enough stocks for the huge demand. 3.2 bill mkt cap. 58 %inst owneship. 23 % inside. 2.1 bi possible buybacks in the next 3 years.
MariachiAndre profile picture
@mvarela1980 so you think the extra supply will get absorbed by the higher demand keeping the earnings mostly unaffected? Do you have any guesses of what the normalised price range for poly could be?
Look at the market's reaction since their additional 100kmt capacity expansion announcement. The market (as I do) clearly believes this is $1.2 billion wasted. They have not made doubling their capacity operational yet and they are already tripling it. They are going to kill themselves just like every single time, boom/bust china style. As it seems none of the solar china stocks will ever accomplish anything, because they are always ahead of the capacity game and thus kneecap themselves. It has been this way almost 20 years, i hoped this time really might be different. Disappointed yet again. Someone should give the top management cheap chinese calculator so that they can count the numbers, supply/demand=balance. Just imagine the fusion energy somehow gets commercialized faster than anticipated or some new solar chemistry in thin films or perovskites breakthrough. What they gonna do with the trillions of $$$ invested in megalomania production lines?
MariachiAndre profile picture
@kukukki theoretically a new technology/disruptor is a constant risk in any industry. They may be able to adapt to new solar technology in the future too. At the moment they should give an answer to the increasing demand and potential new competition. Nothing wrong with that.
@MariachiAndre well they may adapt to new technology as long as the technology is poly based, but thin films or perovskites? If Tongwei and others go crazy like DQ and triple capacity within 18 months poly pricing will totally collapse. Yet it did not have to happen, it is yet again self inflicted. This is the china solar mentality, I have been watching them and actively trading them since STP, (suntech power) inception back 18 years ago. They are almost all the same, Trina was the only more conservative of them. STP, YGE, LDK they all vanished for the same reason, yet they all were leaders at some point of time. Solar installs are growing steady 2 decades. So why in growing market anyone goes bankrupt? None of them went under because their technology was inferior, but for all it was overinvestment. I did like Trina, but they went private. Anyway, I had big hopes for DQ (largest holding for me) but after the announcement I will look for exit if there is some rally. Certainly half of the holding, because the perfectly good $1.2B is in my opinion wasted and so the stock just got more risky. I hope the management will reconsider before they commence the construction and wait until they have the first 100kt fully operational, but based on the announcement it seemed to me that they are ready to start digging.
MariachiAndre profile picture
@kukukki that’s helpful insight for me. Thank you for your response
pat45 profile picture
that is a huge price...especially in china
Given that global solar PV capacity is currently projected to treble over the next 5 years - i.e. 2x existing global capacity will be deployed in the 5 years, it hardly seems cavalier of Daqo, which produces polysilicon at the world's lowest cost per kg, to be ramping up production to meet that demand.

I think we're underestimating the global appetite for solar as the cheapest option for new utility scale electricity capacity.

Market dynamics dictate that economies adapt to the cheapest energy, or get out-competed to bankruptcy (barring continued govt subsidies for fossil fuels).

Also, I anticipate that poly will eventually settle in the $14-18/kg range, leaving Daqo with a (paltry?!?!) 100-150% markup on poly. Should remain rather robust at that level. If they're only making about $7 per kg sold, it would take under two years to recoup the $1.2 billion investment on an additional 100,000 MT of capacity. If poly remains at around $20-24, it might take less than a year to recoup the investment.
@MB4302 it was expected that in Q2, Q3 2023 the poly prices moderate, but with this additional 100k tons of new capacity just for DQ the prices are almost surely going to collapse in full extend of the word, because chances are that Tongwei and others in China will add 100s of thousands of tons as well and in the worse time. end of 2023 or the beginning of 2024 will not be the best time. IMO DQ was smart up to this point, but I am worry now. Yeah 5 years from now they could commence additional 100k of capacity but quadrupling production within 24 months as it seems will happen is a bit insane. Question is how much this was purely business decision and what role played political pressure from chinese government, because the government did announced they want poly prices to go down. DQ will stay profitable but is it really smart to produce 3x more for the same or lower profit? It smells very much like the usual chinese boom/bust process.
Although I think that DQ will be the last man standing if poly pricing really does collapse to the low teens due to their unmatched financial position (market cap cash on hand, zero debt, signed supply contracts for multiple years of full capacity), one shall never underestimate the unique Chinese skill to overinvest and oversupply just about anything. It always happened before so as I said long ago this time if they do not oversupply it would be the very first time and thus a real surprise. Also I worry not about demand, I worry not about DQ’s competitors and worry not about eventual balance in supply/demand, but I do worry that once this new huge capacity is in full swing (sometimes in 2024) the technology may possibly change. The photons can be converted to electricity not just with silicon cells. Some minor improvements can be and will be made but the traditional polysilicon as a means of conversion is essentially maxed out. It will take several years past 2024 to recoup the huge investment. Inevitably at some point, maybe tomorrow or maybe 10 years from now, someone comes with some break thru either in thin films or perovskites and that would change everything. I know the management supposed to know more than the investors on the outside, but maybe sometimes being “inside” one can miss the big picture and so I consider any news about further expansion as negative.
@kukukki Thanks for your comments! But would not DQ's valuation plus cash position be more than enough to compensate for the price decline? Look at DQ in Shanghai stock exchange (688303), it is still going up trend slowly, but DQ ADR is keeping going down, which one is wrong here
@kukukki The only 'breakthrough' in the next 3-8 years is the move from P-type to N-type poly and the emergence of (Chinese made) semiconductor poly for self-sufficiency of their chip industry given the urgency from increased US pressure on that industry. This is where DQ will excel others by miles. No wonder the CEO's tone has become extremely bullish recently even as the stock has underperformed. I will hold/add to this for at least another 3 to 4 years and hope to get a 4x to 6x multibagger.
@spatel0169 DQ mentioned 700M buy back, but based on the recent price action, it does not seem like they are doing it, I am wondering when would they start buying back
ErikInvest profile picture
No debit, PE of 1 and great expansion planning.

Downgrade from analyst and -15% in 5 days.

Market insane.
It's a big investment but not a problem for DQ with US4.5 Billion in cash, cash equivalents & note receivables and no debt.
The IRA will boost demand to limit the polysilicon price decline from additional supply.
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