Daqo New Energy (NYSE:DQ) reported second-quarter financial results on Thursday. The transcript from the company’s second-quarter earnings call has been provided below.
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Summary
DQ New Energy reported sequential revenue growth in Q2 2026 driven by increased sales volume, despite weak market conditions and low demand.
The company maintained a strong balance sheet with zero debt and significant liquidity, totaling approximately $1.9 billion in readily convertible assets.
DQ adjusted its sales strategy in June, increasing sales volume significantly, although the average selling price fell to $4.04 per kilogram.
The company plans to diversify into AI data center power infrastructure as a strategic growth area, with investments in R&D and production facilities.
Polysilicon production exceeded guidance, but market prices remained below production costs, prompting DQ to support industry self-discipline and regulatory measures to stabilize prices.
Financial metrics showed improvement from the previous quarter, with a narrowed gross loss and improved EBITDA margin, although the company still posted a net loss.
Management expressed optimism about long-term growth in the solar PV sector and confidence in navigating current market challenges with strategic flexibility.
Full Transcript
OPERATOR
Welcome to the DQ New Energy Second Quarter 2026 Results Conference Call. At this time, all participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.
I would now like to turn the conference over to Jesse Zhao, Investor Relations Director. Please go ahead.
Jesse Zhao, Investor Relations Director
Hello everyone. I’m Jesse Zhao, the Investor Relations Director of DQ. Thank you for joining our conference call today. DQ just issued its financial results for the second quarter of 2026, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our Chairman and CEO, Mr. Xiang Xu, our Deputy CEO, Ms. Anita Xu, our CFO, Mr. Ming Yang, and myself. Today’s call will begin with an update from Mr. Xu on market conditions and company operations, followed by a translation from Ms. Xu for Mr. Xu, and then Mr. Yang will discuss the company’s financial performance for the quarter. After that, we will open the floor to Q&A from the audience. Before we begin the formal remarks, I would like to remind you that certain statements on today’s call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding this and other risks is included in the reports or documents we have filed with, or furnished to, the Securities and Exchange Commission. These statements only reflect our current and preliminary view as of today and may be subject to change.
Our ability to achieve these projections is subject to risks and uncertainties. All information provided in today’s call is as of today and we undertake no duty to update such information except as required under applicable law. Also during the call, we will occasionally reference monetary amounts in U.S. Dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. Dollars solely for the convenience of the audience.
Now I will turn the call to our Chairman and CEO, Mr. Xiang Xu. Mr. Xu, please go ahead.
Anita Xu, Deputy CEO
Hello everyone, this is Anita, and I’ll now translate for our Chairman, Mr. Xu. In the second quarter of 2026, market sentiment across the solar PV industry remained cautious amid weak domestic demand and elevated inventory levels, which drove prices lower across the solar value chain. Despite these headwinds, we resumed sales in June, delivering a sequential increase in revenue and a narrowing of quarterly operating and net losses. Throughout this period, we continued to maintain a robust and healthy balance sheet with zero debt.
As of June 30, 2026, we held a cash balance of 555.3 million, short-term investments of 250 million, bank acceptance notes of 71.7 million, held-to-maturity investments of 51 million, and a fixed-term bank deposit balance of 994.8 million. Together these readily convertible assets totaled US$1.9 billion, providing us with ample liquidity, confidence, and strategic flexibility to navigate the current market downturn. On the operational front, we continued to take proactive measures to navigate challenging market conditions, with our nameplate capacity utilization rate operating at approximately 57% during the period.
Total production volume at our two polysilicon facilities was 43,600 metric tons for the quarter, exceeding our guidance range of 35,000 metric tons to 40,000 metric tons. With polysilicon market prices remaining below production costs since the first quarter of 2026, we initially refrained from engaging in below-cost sales in line with Chinese self-regulation guidelines and adopted a disciplined wait-and-see approach pending further implementation of the national anti-involution policies.
However, after an extended period without clear policy updates, we adjusted our sales and pricing strategies toward a more market-oriented approach in June. As a result, our sales volume increased from 4,482 metric tons last quarter to 15,190 metric tons, with average selling price falling to US$4.04 per kilogram. Our order intake and shipment volumes have continued to pick up in the third quarter, reflecting increased confidence in the quality and an ongoing preference for our products from customers.
On the cost side, total production costs remained flat sequentially at US$5.95 per kilogram, with cash costs edging down by 0.4% to US$4.57 per kilogram, and manufacturing cost in R&D terms declining slightly. In light of the current market dynamics, we expect total polysilicon production volume in the third quarter of 2026 to be approximately 40,000 metric tons to 45,000 metric tons. For the full year of 2026, we expect production volume to be in the range of 150,000 metric tons to 180,000 metric tons.
Polysilicon market prices came under further downward pressure during the second quarter, with prices declining from 35 to 37 RMB per kilogram at the end of the first quarter to 31 to 34 RMB per kilogram at the end of the second quarter amid subdued demand, depressed pricing, and accumulated industry-wide inventories. Polysilicon producers operated at low utilization rates. As we make our way through the third quarter, the rollout of anti-involution measures is gaining momentum.
In July, a series of mandatory national standards were issued for energy consumption and product efficiency across the solar PV value chain, including the final official version of a new standard titled Energy Consumption Limits per Unit of Polysilicon Output, which will take effect on January 1, 2027. Manufacturers whose unit energy consumption exceeds 6.3 kg standard coal per kilogram must complete corrective improvements by that date or face the risk of plant shutdown.
Notably, the threshold of 6.3 per kilogram is stricter than the 6.4 proposed in the draft, signaling regulators’ commitment to accelerating the phase-out of inefficient capacity. On July 27, the China Photovoltaic Industry Association issued the General Principles for Cost Accounting Models in the Photovoltaic Industry, an initiative to regulate market competition and advance standardized industry governance to lay the foundation for price regulation and enforcement.
On July 31, the State Administration for Market Regulation issued price compliance guidelines for the solar PV sector, promoting a structural shift from price competition to value-driven differentiation. The SAMR emphasized that solar PV companies must conduct price-compliance self-reviews and curb irrational low-price competition, and that the CPIA should strengthen industry self-regulation, promote the General Principles, and guide companies away from illegal pricing practices such as low-cost dumping.
The SAMR also indicated that it will take enforcement action against non-compliant entities. Together with seven other counterparties, we jointly signed an initiative to eliminate low-cost sales and fully comply with energy consumption standards on August 6th. As a result of these collective measures, polysilicon prices are beginning to show signs of recovery, with spot prices stabilizing and forward prices rebounding by more than 10% from the recent trough.
We’re also diversifying beyond our core polysilicon to hedge against solar PV cyclicality, targeting the fast-growing AI data center power infrastructure market. On June 3, 2026, we announced the signing of an investment agreement to establish a manufacturing base focused on the R&D, manufacturing, and sales of next-generation energy solutions and related equipment for AI data centers. This includes energy storage systems, solid-state transformers, and solid-state circuit breakers.
These technologies support the industry’s transition to high-voltage direct current architecture, such as the 800-volt DC standard advanced by Nvidia and other leading AI infrastructure providers. The platform is anchored by DQ Group, our affiliated entity under common beneficial ownership with DQ, which brings over 40 years of power equipment manufacturing expertise, established technology, and deep talent and customer relationships. Accelerated by change in the segment, we view AI data center power infrastructure as a structural growth opportunity that complements our core business and broadens our earnings base.
Consistent with our strong track record, having navigated several cycles, we intend to pursue this expansion in a disciplined manner that preserves our balance sheet strength. Despite a challenging environment, the solar PV industry continues to exhibit compelling long-term growth prospects. Growing vulnerabilities in global energy markets have sparked widespread concerns about national energy security, in which the solar PV and renewable energy sectors can play a crucial role.
As one of the world’s lowest-cost producers of the highest-quality material, backed by a robust balance sheet and zero debt, we remain optimistic about the sector and are well positioned to capitalize on the anticipated market recovery and long-term growth opportunities. We’ll continue to strengthen our competitive edge through advancements in high-efficiency technology and cost optimization via digital transformation and AI adoption. As the world accelerates its transition to clean energy, we’re confident in our ability to play a leading role in shaping that future.
And now I’ll turn the call to our CFO, Mr. Ming Yang, who will discuss the company’s financial performance for the quarter. Ming, please go ahead.
Ming Yang, CFO
Thank you, Anita, and hello everyone, this is Ming Yang, CFO of DQ. We appreciate you joining our conference call today. I will now go over the company’s second quarter 2026 financial performance. Revenues were 62.7 million, compared to 26.7 million in the first quarter of 2026 and 75 million in the second quarter of 2025. The increase in revenue compared to the first quarter of 2026 was primarily driven by higher sales volume. The company resumed normal sales activity starting in June, following a prolonged period with no new policy developments.
Gross loss was 82.7 million, compared to 139 million in the first quarter of 2026 and 81.4 million in the second quarter of 2025. Gross margin was negative 132%, compared to negative 520% in the first quarter of 2026 and negative 108% in the second quarter of 2025. The sequential improvement in gross margin was primarily due to a decrease in provisions for inventory impairment, which was 55.7 million in the second quarter of 2026, compared to 98.9 million in the first quarter of 2026.
SG&A expenses were 15.8 million, compared to 12.2 million in the first quarter of 2026 and 32 million in the second quarter of 2025. The sequential increase was primarily due to higher sales volume in the second quarter of 2026. The year-over-year decrease was also due to the company recognizing 18.6 million in non-cash share-based compensation costs related to its share incentive plan in the same quarter of 2025. R&D expenses were 1.6 million, compared to 0.8 million in the first quarter of 2026 and 0.8 million in the second quarter of 2025.
The increase is primarily due to R&D of next-generation energy solutions for AI data center power infrastructure. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter. Loss from operations was 98 million. to 150 in the first quarter of 2026 and 115 million in the second quarter of 2025. Operating margin was negative 156% compared to negative 560% in the first quarter of 2026, and negative 152% in the second quarter of 2025. Net loss attributable to DQ Corp. shareholders was 81 million compared to 88 million in the first quarter of 2026 and 76.5 million in the second quarter of 2025. Loss per basic ADS was $1.20 compared to $1.31 in the first quarter of 2026 and $1.14 in the second quarter of 2025.
Adjusted net loss attributable to DQ shareholders, excluding non-cash share-based compensation costs, was $81 million compared to 88.4 million in the first quarter of 2026 and 67.9 million in the second quarter of 2025. Adjusted loss per basic ADS was $1.20 compared to $1.31 in the first quarter of 2026 and $0.86 in the same quarter of 2025. EBITDA was negative 29 million compared to negative 83 million in the first quarter of 2026 and negative 48 million in the second quarter of 2025.
EBITDA margin was minus 46.8% compared to negative 311% in the first quarter of 2026 and negative 64% in the second quarter of 2025. Now, on the company’s financial condition, as of June 30, 2026 the company had $555 million in cash and cash equivalents compared to 559.4 million as of March 31, 2026 and 598.6 million as of June 30, 2025. As of June 30, 2026, short-term investment was 215 million compared to 288 million as of March 31, 2026 and 418 million as of June 30, 2020.
As of June 30, 2026, note receivable balance was 71.7 million compared to 2020.8 million as of March 31, 2027 and $49 million as of June 30, 2025. Note receivable balance, which represents bank notes with maturity within six months. As of June 30, 2026, held-to-maturity investment was 51 million compared to 50.3 million as of March 31, 2026 and 0 as of June 30, 2025. As of June 30, 2026, the balance of fixed term deposits within one year was 928.9 million compared to 1 billion as of March 31, 2026 and 960.7 million as of June 30, 2025.
Now on the company’s cash flows for the six months ended June 30, 2026. Net cash used in operating activities was 276 million compared to 105 million in the same period of 2025. For the six months ended June 30, 2026, net cash used in investing activities was 159.6 million compared to 342.7 million in the same period of 2025. Net cash used in investing activities in 2026 was primarily due to the purchase of short-term investments and fixed term deposits.
For the six months ended June 30, 2026, net cash used in financing activities was 7.8 million compared to 32,000 in the same period of 2025. Net cash used in financing activities in 2026 was primarily related to $7.8 million in stock purchases made by the company’s subsidiary Xinjiang Daqo from its minority shareholder. And that concludes our prepared remarks. We will now open the call to Q&A from the audience.
OPERATOR
Operator, please begin.
We will now begin the question and answer session. To ask a question, you may press Star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Philip Chen with Rock Capital Partners. Please go ahead.
Oscar Chim, Analyst at Rock Capital Partners
Hi, this is Oscar Chim for Phil. Can you hear me okay?
Jesse Zhao, Investor Relations Director
Yes. You’re loud and clear.
Oscar Chim, Analyst at Rock Capital Partners
Okay, I have two questions. First question is on government support on poly pricing. You know, even with the recent 10% rebound in forward prices, poly ASP remains below industry production costs since late Q1. How would you characterize the central government stance on supply rationalization? Are you anticipating any incremental regulatory support that could help establish a sustainable price floor in the near term? And then I have a follow up.
Jesse Zhao, Investor Relations Director
Okay, we’re going to translate your question. Okay, I will translate for our CEO, Mr. Xi. On August 6th, led by the China Photovoltaic Industry Association, there is a strong initiative for self-discipline. Based on the CPIA cost model, the industry average production cost is estimated to be around 50,000 RMB per ton, so about 50 RMB per kg. But due to the current market environment where demand activity is relatively low and there’s still approximately 500,000 to 600,000 tons of inventory in the industry, we think this price recovery might take a little bit longer than anticipated.
But there is strong consensus within the industry for self-discipline and also with the urging of the government and the related departments. The consensus is that it’s no longer viable to sell below cost. And what we’re seeing in the market is that the quotations for polysilicon pricing from different manufacturers have already exceeded about 40 RMB per kilogram. So we’re optimistic about the current policy development and we’re waiting to see how the policies may be enforced going forward.
So right now, in terms of the value chain between the buyers and sellers of polysilicon, some of the buyers are still observing the market and the policy development and they’re taking a wait-and-see approach. But in terms of the polysilicon manufacturers’ expectations for a reasonable price where they would not be selling at a loss or below their cost, there’s still some, you can call it a wait-and-see, between the polysilicon manufacturers and the downstream.
But we do believe that the past industry practice of selling below cost, especially in the first six months of this year, is likely to end. The government is very adamant about preventing dumping of products and selling below cost. So, within the legal framework for the Price Law and for anti-involution, the expectation is that this is likely to move forward optimistically over the next several months. Over the past few years the polysilicon manufacturers, or the whole industry in general, have seen significant losses, and we do not think that this is long-term sustainable.
In fact, it is very unsustainable and this is likely to lead the industry into trouble. If we look at DQ, especially in December of last year when the hybrid policy was more successful, DQ had no cash loss in Q4 2025, so we were able to achieve positive operating cash flow during that period. We think that that’s a more sustainable timing and framework going forward.
Oscar Chim, Analyst at Rock Capital Partners
Thank you for the color, Mr. Xi and Mr. Yang. Just my second question is on the self-discipline agreement signed in August. You know, previous rounds of self-regulation kind of struggled to maintain compliance once prices fluctuated. Just wondering what makes this framework structurally distinct from past attempts. And then regarding the energy consumption requirements, what is your estimate of total industry capacity that could be phased out?
OPERATOR
Our next question comes from Alan Liu with Jefferies. Please go ahead.
Jesse Zhao, Investor Relations Director
We’re still answering, not translating. Hold on, hold on. Okay, give us a minute.
All right. We have Philip Chen back on the podium. My apologies. Now let me translate for Mr. Xi. We believe that the current round of anti-involution policy and the Price Law enforcement is likely to sustain. What we saw in the previous round was that there was a proposal for an industry consolidation platform to accelerate the exit of excess capacity, but the State Administration for Market Regulation stepped in because they were very worried about anti-monopoly practices between the leading manufacturers. They were worried that this would bring non-market activities or behaviors by the main manufacturers.
But this time the current effort is led by the State Administration for Market Regulation, and this is bringing self-discipline forward. Also, there is no coordination between the manufacturers on pricing or allocation of sales volume, for example. This time it’s really based on each individual manufacturer’s own production costs and manufacturing efficiencies, and for them to sell products based on their ability to produce at a lower cost. We think that this time it’s actually much more sustainable and is being supported by the government.
Through these two efforts — being one of the lowest cost producers within the industry, as well as the regulations on energy usage — we think that this time it will promote a more market-oriented approach to both capacity exit and to the selling of products at a reasonable price. And this is all under the current legal framework brought forward by the government.
Oscar Chim, Analyst at Rock Capital Partners
That’s all my question. Thank you.
Jesse Zhao, Investor Relations Director
Thank you, thank you.
OPERATOR
Our next question comes from Alan Liu with Jefferies. Please go ahead.
Alan Liu, Analyst at Jefferies
Thanks, management, for taking my question. So my first question is a follow-up on the overall initiative to avoid selling below cost. So my understanding is that current inventory in the industry is at quite a high level and the end demand is also quite weak at the same time. So when would you expect the polysilicon price — for example, you mentioned there are price quotes at about 40 RMB per kilogram — but given that there is inventory at the wafer players and demand isn’t that strong, when would you expect the first, like, batch of transactions at a higher price to happen?
Because in the past two weeks all the data have halted. So we’d like to know when we expect the real transactions coming out.
Jesse Zhao, Investor Relations Director
Okay, let me translate for a minute. Okay. Okay, let me translate for Mr. Xi. I think he’s seeing in the market that there are some transactions happening at roughly 40,000 RMB per ton, or about 40 RMB per kilogram, although there’s a very low volume of transactions right now. Even though the overall demand is relatively weak, there are some wafer producers in the industry that have very low to no inventory where they are procuring to production. So we are seeing some transactions, although not very high.
What we’re seeing is some manufacturers are testing the market. Although the full cost model would stipulate around 50 RMB per kilogram, some producers are right now testing the market and selling at approximately 40 RMB per kilogram. And it’s been about two weeks since the announcement of the manufacturers and the guidance from the government, so we do think that going forward we are likely to see more and more transactions happen at this new price range.
Alan Liu, Analyst at Jefferies
Understood. So strictly based on the production cost, polysilicon price would be higher than that. But given that in this round of the anti-involution initiative there is not an acquisition plan afterwards, so if prices go up to 40 or maybe 45 or 50 RMB per kg, what do you think would happen? Because effectively this will reach the cost level of more players. So who would be able to sell their products, or what do you think the end game of this round of initiative is?
Or is there some capacity that will be shut down because of the higher energy consumption requirement, or how do you see this?
Jesse Zhao, Investor Relations Director
Let me translate for Mr. Xi first. Okay, just a minute. Okay, let me translate for Mr. Xi. Okay. He thinks that the recent energy quota policy from the government, where there’s different energy usage requirements for the industry, is what will lead to forced exit of a significant amount of capacity that have significant or higher energy usage. So we’re likely to see that happen pretty soon. And then also the industry self-discipline and there’s a commitment from the various manufacturers that there should be a voluntary reduction of capacity or production.
And then also there’s a commitment that manufacturers should not be selling below production cost. So we think that both of these are likely to happen starting the second half of this year. And then there’s also the issue that not that many producers actually have the capability to produce, especially now that the industry is running at a fairly low utilization level. So a lot of manufacturers have let go a significant number of people. So there is actually a lack of employees and also lack of training and time.
So a lot of capacity that have been shut down is unlikely to restart going forward. So even now he thinks that, for example, the effective capacity within the industry method—close to 3 million tons have been built—capacity is already less than 2 million tons right now. It’s likely to go lower as well.
Alan Liu, Analyst at Jefferies
Thank you. My last question is about the AIDC initiative as a second growth driver of the company. Wonder if there’s a backlog or progress to share on this build business. Thank you.
Jesse Zhao, Investor Relations Director
Okay, let me translate. Okay, let me translate for Mr. Shi. So we do see that the AIDC-related power infrastructure and equipment market is actually a very viable sector where it is going to be a significant growth driver for the company. And it’s the second sector that the company is entering into. So I think as most investors are probably aware, we do think the growth for the polysilicon market going forward is likely to be relatively low in terms of volume demand as well as for solar.
So the company is actively looking for other areas of growth. And because DQ has more than 40 years of experience in the power equipment sector and being one of the leading manufacturers and suppliers of high- and low-voltage power equipment such as transformers and circuit breakers, DQ is seeing very strong demand especially in AI data center-related power equipment demand. So we do think that is a very significant and real opportunity for the company.
And DQ brings many years of experience and advantage in manufacturing, in R&D, and technology capability, including in terms of products as well. With the growing power demand, and especially for the next-generation power infrastructure for IDC where, led by NVIDIA, there’s this future development of a next generation of equipment under the 800-volt DC infrastructure, we’re targeting initially the solid-state transformer and solid-state circuit breaker market.
So the industry is starting in 2027 next year, and then we expect to see very significant growth from 2028 to 2030 with power demand from these new AI data centers based on the new 800-volt DC technology. With DQ, it brings significant experience and advantage and at the same time matches with DQ New Energy’s strong balance sheet and capital position to capture this growth driver. Now we have built an R&D team in Shanghai and we expect to have an initial product ready by year end and then with prototypes and achieving sales starting in 2027 and then capturing the growth opportunity 2028 to 2030.
Our goal is to become an industry leader within this IDC power equipment sector by being a tier one both in terms of product and the team. So that’s our current goal right now.
Alan Liu, Analyst at Jefferies
Thanks a lot for management. Thank you.
OPERATOR
Great, great. Thank you, Alan.
Our next question comes from Mona Wang with Goldman Sachs. Please go ahead.
Mona Wang, Analyst at Goldman Sachs
Sure. Thanks, management, for taking that question. I have two questions. One is related to the poly business and another to the AIDC business. So first, in terms of the poly business, I think you just mentioned like currently the industry upstream and downstream players is kind of wait and see. And given the downstream inventory is at relatively higher level, I’m not sure what the outcome do you expect for after the wait and see period. And particularly we had this kind of self-discipline in first half, like we uphold our pricing and then we record the lower shipments.
So I’m wondering like do you have any shipment guidance towards the end of the year? What’s our priority going forward? Will we uphold the pricing to the higher level, 50,000 per ton, or we are kind of want to reach the balance between price or shipments? So want to hear more about the poly business operations strategy. Thank you.
Jesse Zhao, Investor Relations Director
Okay. Okay, thank you, Mona. So let me transfer your question for Mr. Shi and then he will respond. Okay, just a minute. Okay, let me translate for Mr. Shi. So in the second half, what we believe is that because DQ New Energy, we have superior quality of product in the market, so selling and shipping our product is really not an issue. I think the question is really price. So in the first half, because we adhere to self-discipline, we did not sell as much products as our normal market share, because our competitors were engaged in low-cost sales practices.
But if we look at our market share in the past, we believe that we can achieve approximately 15% market share within the industry, and we continue to expect that going forward. So our target is to sell at an appropriate price or reasonable price and also be fully compliant with the government guidance and the price law. So what we expect is that, say, in the next six to 18 months we’re likely to see a forced exit or a market-based exit of manufacturers with high production costs, or manufacturers with poor cash positions or poor cash flow.
So companies with not a good balance sheet are likely to continue to struggle going forward, while DQ New Energy, with our cash position and our strong balance sheet, also our high product quality and low cost, we expect that we’re likely to do better and to do well in the market. So especially in 2027, where we expect to see a much improved and better market environment, and then we expect to continue to lower our inventory going forward to relatively low inventory levels.
That’s our target.
Mona Wang, Analyst at Goldman Sachs
Okay, thank you. So can I conclude that we will hold up the price in near term and we will wait the rest of the marginal players to exit, and then that’s the time we will see fast inventory depletion and recovery of the shipment is likely to occur in the next six to 18 months?
Jesse Zhao, Investor Relations Director
I think in terms of pricing, we cannot sell below cost.
So we’re going to adhere to that and, at the same time, we’ll look for opportunities to sell at a reasonable price and then wait for the market to have additional capacity.
Mona Wang, Analyst at Goldman Sachs
Okay, that’s super clear. And my second question about AIDC, I think we have put out announcements like we have 6 billion renminbi total investment, of 2 billion in the first phase, and you just mentioned we will have sales volume recorded in next year. So just wondering, can you share a bit more about the plan for the IDC business? Specifically like our CapEx timeline and the source of capital for this 6 billion or 2 billion investments, and what’s our expected payback duration for the first phase of the production phase, and what the normalized profitability from this business do we expect we’ll achieve?
And also for other operating metrics, will we have more other resources allocated for this new business development, or we can use some of the synergies from our DQ Group, the aligner company? So a lot of details—can you share a bit more regarding to this mathematics? Thank you so much.
Jesse Zhao, Investor Relations Director
Okay, let me translate your question first quickly. Okay, hold on. The service. Okay, let me translate for Mr. Shi. Okay, I think first of all let me just clarify on the investments involved. So even though the total project anticipated investment is 6 billion RMB, we’re only committing the first phase right now, which is about 2 billion RMB, which will cover solid-state transformers, solid-state circuit breakers, and also our E-house total solution for infrastructure and also some related to energy storage.
The remaining 4 billion is not committed as of today, and it will be planned sometime in the future. In terms of our strategy, we’re focusing on AIDC-related power infrastructure equipment, and we expect to have three primary products. One is a total solution or a packaged solution, which is going to be a plug-and-play kind of solution for AI power infrastructure, which has all the related power equipment. And then also solid-state transformers and solid-state circuit breakers, including the related software and control.
There is very significant synergy with DQ, because of DQ’s experience and know-how and also their position within the market. We think that we can receive significant orders from customers. Now we’re in the phase of doing R&D and also the building of related manufacturing facilities. The R&D team is now in place and we continue to expect to have our prototype ready by year end and getting these products. In terms of 2026 and 2027, it’s really a preparation period and introduction of the product into the market.
We think that the market will see a high-growth phase from 2028 to 2030, where we do expect a significant ramp-up of revenue during this period for these related products and business.
Mona Wang, Analyst at Goldman Sachs
Okay, thank you.
Very small question.
Jesse Zhao, Investor Relations Director
For the 2 billion committed investment, we will expand over the next two years. This year is only maybe 30 to 40 million US dollars, and then the remaining will be over the next two years.
Mona Wang, Analyst at Goldman Sachs
Sure. That’s all from me. Thank you.
Jesse Zhao, Investor Relations Director
Okay, thank you. And then our CEO will make additional comment.
Anita Xu, Deputy CEO
Okay. And Mr. Xu will provide an update on our semiconductor business where the company has spent a total of investment, including land and related equipment facilities, about 1.2 billion RMB into the business. We’ve been doing product trial production and also qualifications with our customers, and the qualification cycle has been much longer than we anticipated, but we’re continuing to do this. He’s very optimistic, looking at very significant market demand, where demand for semiconductor polysilicon is roughly 75,000 tons per year while right now the current industry production for semiconductor polysilicon is only about 57,000 tons per year.
So it’s anticipating very significant growth for this market sector. We’re going to ramp up and reinvigorate our activities for this.
OPERATOR
This concludes our question and answer session. I would like to turn the conference back over to Jessie Zhao for any closing remarks.
Jesse Zhao, Investor Relations Director
Thank you everyone again for participating in today’s conference call. Should you have any further question, please don’t hesitate to contact us. Thank you and have an awesome day. Goodbye.
OPERATOR
The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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