Daqo New Energy Corp. (DQ): Business Model Canvas [Dec-2025 Updated]

You're trying to make sense of the solar industry's razor-thin margins, and frankly, understanding Daqo New Energy Corp.'s business model is your best map for the next year. As someone who has spent two decades dissecting these complex supply chains, I can tell you their game isn't just about making polysilicon; it's about cost dominance, evidenced by their Q2 2025 cash production cost hovering near an incredible $5.12/kg, all while managing a massive 305,000 metric ton capacity. We'll break down exactly how their long-term contracts with giants like LONGi Green Energy and their solid $2.21 billion liquidity position (as of Q3 2025) create a moat in this volatile market, so stick around to see the nine blocks that defintely define their operation.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Daqo New Energy Corp. running, especially as the polysilicon market shifts in late 2025. These partnerships are about securing volume and managing the cost of the primary input: metallurgical silicon and chemical precursors.

The supply side is heavily reliant on long-term volume commitments with major downstream players. For instance, the agreement with a subsidiary of JA Solar, which covers a total volume of approximately 78,200 MT of high-purity mono-grade polysilicon, is scheduled to conclude in December 2025.

The relationship with LONGi Green Energy is more extended. Daqo New Energy's subsidiary committed to providing LONGi with a total of 251,280 MT of high-purity mono-grade polysilicon spanning from May 2023 through December 2027. This is a significant portion of their committed future output.

Beyond these named entities, Daqo New Energy has other substantial, multi-year commitments. One 'Procurement Framework Contract' involves the purchase of 432,000 tonnes of solar-grade high-purity polysilicon between 2023 and 2028. Based on October 2022 pricing data, the estimated value of this deal was approximately RMB130.896 billion, or about US$18.2 billion.

The cost structure, which is critical for competitiveness, is directly influenced by raw material partners. Daqo New Energy's average total production cost for polysilicon in Q3 2025 was reported at $6.38/kg. This represented a 12% YoY decrease from the $7.26/kg recorded in the prior year, a reduction the company directly linked to a decline in slick metal prices.

The company is also actively partnering on the operational efficiency front. Daqo New Energy is positioning itself to optimize its cost structure by enhancing its higher-efficiency N-type technology and adopting digital tools.

Here's a look at the scale of these key supply relationships and the latest operational data:

The focus on internal optimization through external technological collaboration is clear. Daqo New Energy is integrating these digital advancements to maintain its position as one of the world's lowest-cost producers.

• - Integration of AI and automation into production processes.
• - Strategic goal to optimize cost structure via digital transformation.
• - Focus on providing high-purity polysilicon for next-generation N-type technology.
• - Total nameplate capacity stands at 305,000 metric tons.

The raw material sourcing is fundamental to hitting those cost targets. You need reliable access to the base inputs.

• - Key suppliers for metallurgical silicon and chemical precursors.
• - Cost reduction in Q3 2025 directly tied to lower slick metal prices.

Finance: draft 13-week cash view by Friday.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Key Activities

Daqo New Energy Corp. focuses its key activities on the core manufacturing of high-purity polysilicon, primarily utilizing the modified Siemens process to produce the material for the global solar PV industry.

The company actively manages its large-scale manufacturing base, which has a total polysilicon nameplate capacity of 305,000 metric tons. Despite this capacity, operational rates have been adjusted based on market conditions; for instance, the capacity utilization rate was maintained at 40% in the third quarter of 2025.

Continuous process optimization is a central activity, aimed at maintaining its position as one of the world's lowest cost producers of high-purity polysilicon. This optimization is evident in the trend of unit production costs throughout 2025, which saw sequential improvements as market conditions shifted.

The reduction in cost per kilogram is a direct result of these optimization efforts. For example, the average cash cost dropped from $5.31/kg in the first quarter to $4.54/kg by the third quarter of 2025.

Research and development activities are strategically directed toward future product enhancement. The Chief Executive Officer has stated that Daqo New Energy Corp. is well-positioned to strengthen its competitive edge by enhancing its higher-efficiency N-type technology.

Key operational outputs and targets for 2025 reflect the management of this production scale:

• Full-year 2025 polysilicon production guidance was revised to be between 121,000 MT and 124,000 MT.
• Polysilicon production volume in the third quarter of 2025 reached 30,650 tonnes.
• Sales volume in the third quarter of 2025 surged to 42,406 MT.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Key Resources

You're looking at the core assets that power Daqo New Energy Corp.'s position in the high-purity polysilicon market as of late 2025. These aren't just line items; they represent massive physical and intellectual capital.

The physical foundation is its large-scale, low-cost polysilicon manufacturing facilities in Xinjiang, China. The total nameplate capacity sits at 305,000 metric tons, though operational rates have been adjusted based on market conditions. For instance, in the third quarter of 2025, the capacity utilization rate was reported at 40%.

The company's cost structure is a key resource, showing continuous improvement even amid market challenges. You saw the average cash cost drop to a historic low of $4.54/kg in Q3 2025. That's a significant drop from the $5.12/kg seen in the prior quarter.

Intellectually, Daqo New Energy Corp. relies on its process technology. They utilize the chemical vapor deposition process, or the "modified Siemens process," coupled with upgraded hydrochlorination technology to produce polysilicon cost-effectively via a closed-loop system. This technical edge supports the quality of their output, which is highly-purified polysilicon suitable for mono-wafer and N-type applications. Historically, over 99% of their product was sold into mono-wafer applications, and N-type material represented about 70% of total production volume back in 2024.

Financially, the balance sheet provides substantial strategic flexibility. As of September 30, 2025, Daqo New Energy Corp. held a strong liquid asset position of approximately $2.21 billion. This is the pool of cash, short-term investments, and bank deposits available for immediate use.

Here's a quick look at some of those key operational and financial figures from the Q3 2025 period:

The ability to consistently lower the cash cost per kilogram, hitting $4.54/kg in Q3 2025, is a direct result of leveraging that proprietary technology at scale.

The company's key tangible and intangible assets are:

• Large-scale, low-cost polysilicon manufacturing facilities in Xinjiang, China.
• Proprietary chemical vapor deposition and hydrochlorination technology.
• Strong liquid asset position of approximately $2.21 billion as of Q3 2025.
• Highly-purified polysilicon product suitable for mono-wafer and N-type applications.

Finance: draft 13-week cash view by Friday.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Value Propositions

You're looking at the core reasons why customers choose Daqo New Energy Corp. over others in the solar supply chain. It boils down to product specification, cost leadership, and supply security.

• - Supply of ultra-high-purity polysilicon required for advanced N-type solar cells. The company's focus aligns with the industry shift, with the CEO noting a focus on optimizing N-type technology in Q3 2025.
• - One of the world's lowest polysilicon cash production costs, around $5.12/kg in Q2 2025. This cost position improved further in the subsequent quarter.
• - Reliable, large-volume supply secured through long-term contracts for customer stability. The company has a history of securing multi-year agreements, such as a contract for 432,000 tonnes spanning 2023 to 2028.
• - Consistent product quality that meets stringent specifications for high-efficiency PV products. The confidence in this quality drove Q3 2025 sales volume to 42,406 MT, a 134% sequential increase, as customers bought current output plus inventory.

Here's a quick look at the operational scale and cost structure as of the latest reported quarter, Q3 2025, which shows the cost advantage in action:

The ability to deliver this volume is supported by significant liquidity; total cash, short-term investments, bank notes receivable, and fixed term bank deposits stood at $2.21 billion at the end of Q3 2025. This financial strength helps ensure the continuity of supply even when market prices are challenging, like the Q2 2025 average selling price of $4.19/kg.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Customer Relationships

You're looking at how Daqo New Energy Corp. locks in its buyers for that high-purity polysilicon. It's all about securing the long haul, which is key when the market swings as hard as solar does.

Direct, long-term contractual relationships with major downstream solar manufacturers.

Daqo New Energy Corp. manufactures and sells high-purity polysilicon to photovoltaic product manufacturers who turn it into ingots, wafers, cells, and modules. The company has a total polysilicon nameplate capacity of 305,000 metric tons. A significant portion of the business relies on these deep ties; over 60% of Daqo New Energy Corp.'s revenue is generated by selling polysilicon products to major China-based photovoltaic manufacturers, including JinkoSolar, Shuangliang, and Gokin Solar.

Strategic relationship management to secure advance payments for supply commitments.

The management of these strategic relationships translates directly onto the balance sheet. For instance, as of September 30, 2025, the line item for Advance from customers - long term portion showed a value of 16,916 (units are typically in thousands of USD, but I'm only providing the number). This mechanism helps Daqo New Energy Corp. secure its position even when market prices are volatile, as seen in Q1 2025 when sales volume dropped but inventory reduction was prioritized.

High customer confidence driven by consistent product quality and reliability.

Customer confidence is definitely a major factor, especially when the company is managing capacity utilization rates that were at 40% in Q3 2025. The market's preference for Daqo New Energy Corp.'s product was clear in the third quarter of 2025. Sales volume for that period reached 42,406 MT, which far exceeded the production volume of 30,650 MT. This allowed the company to reduce inventory to a healthy level, showing customers were willing to take product. Furthermore, the company has been aggressively managing its cost structure, which supports competitive pricing for customers; total production cost declined by 12% to $6.38/kg in Q3 2025 from $7.26/kg in Q2 2025.

Dedicated sales and technical support for product integration and quality control.

The ability to sell volume exceeding production, even when the industry utilization rate is low, speaks to the perceived value of Daqo New Energy Corp.'s product. The CEO noted that the strong sales volume increase in Q3 2025 reflected customers' confidence in the product quality and their continued preference in the new pricing environment. This preference is the result of ongoing operational excellence, which you can see reflected in the cost metrics.

Here's a quick look at how operational performance in Q3 2025 supported customer fulfillment:

The drop in cash cost from $5.12/kg in Q2 2025 to $4.54/kg in Q3 2025 is a concrete example of the efficiency that underpins these customer relationships.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Channels

You're looking at how Daqo New Energy Corp. gets its high-purity polysilicon into the hands of the global solar photovoltaic (PV) product manufacturers. Honestly, for a company operating in a cyclical industry, the channel strategy is all about direct control and managing large-volume movements.

The primary channel relies on a direct sales force. This team manages the relationships with those large, global PV product manufacturers who are increasingly demanding the company's higher efficiency N-type technology. This direct approach cuts out intermediaries, which is defintely key when dealing with high-spec, high-volume commodity sales where relationship quality directly impacts order flow.

Shipments are handled via direct shipment from Daqo New Energy Corp.'s manufacturing facilities straight to the customer factories. This logistical path is critical for maintaining product integrity and managing lead times in a market that saw significant volume swings in 2025. For instance, in the third quarter of 2025, the company reported a massive push to clear inventory, moving significantly more product than it produced that quarter.

This sales volume of 42,406 MT in Q3 2025, compared to production of only 30,650 MT, shows they were actively using this direct channel to reduce existing inventory levels following the market inflection point in polysilicon prices.

A significant part of the sales transaction structure involves the use of bank notes receivable. This suggests that a portion of the revenue generated through these direct sales channels is realized not immediately in cash, but as a short-term, interest-bearing instrument from the customer or their bank. This is a common practice for managing large, high-value transactions in the sector.

The scale of this financing mechanism is substantial, as shown by the year-to-date figures:

• Bank notes receivable balance as of September 30, 2025: $157 million.
• Bank notes receivable balance as of June 30, 2025: $49 million.
• Bank notes receivable balance as of September 30, 2024: $83 million.

To put that $157 million in context with the company's overall liquidity as of September 30, 2025, you see a very strong cash position backing up these receivables, which all represent bank notes with maturity beyond six months.

Finance: draft 13-week cash view by Friday.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Customer Segments

Daqo New Energy Corp. serves the core of the solar photovoltaic (PV) value chain, primarily supplying high-purity polysilicon to large-scale manufacturers who convert this material into ingots, wafers, cells, and modules.

The operational scale indicates the volume directed to these downstream customers. For instance, Daqo New Energy Corp. reported polysilicon sales volume of 28,006 MT in the first quarter of 2025. This ramped up significantly in the third quarter of 2025, reaching 42,406 MT, a sequential increase of 134% over the second quarter of 2025 volume of 18,126 MT. Management's full-year 2025 production guidance was set between 121,000 MT and 124,000 MT as of late October 2025.

Global solar companies prioritizing advanced technology are a key segment, as Daqo New Energy Corp. focuses on enhancing its higher-efficiency N-type technology. This positions the polysilicon for use in the most advanced cell structures demanded by global solar developers.

Strategic customers are secured through multi-year, high-volume supply agreements, locking in future demand irrespective of short-term price volatility. One such agreement with LONGi Green Energy commits Daqo New Energy Corp. to supply a total amount of 251,280 MT of high-purity mono-grade polysilicon from May 2023 to December 2027. Another five-year agreement, running from November 2022 to December 2027, covers 137,000 MT with a leading solar manufacturing company in China. A third agreement involves 27,600 MT spanning from January 2023 to December 2027.

Here's a look at recent operational metrics relevant to customer fulfillment and market engagement:

The customer base relies on Daqo New Energy Corp. for material quality, as evidenced by the focus on N-type technology, which is critical for achieving higher conversion efficiency in final solar products.

• - Manufacturers of wafers, cells, and modules requiring high-purity mono-grade polysilicon.
• - Customers targeted by N-type technology focus, indicating demand for high-efficiency solutions.
• - Strategic partners with whom Daqo New Energy Corp. has executed agreements covering hundreds of thousands of metric tons through 2027.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Cost Structure

You're looking at the cost side of Daqo New Energy Corp.'s operations as of late 2025, and frankly, it's dominated by the realities of large-scale, capital-intensive manufacturing in a cyclical market. The structure is heavily weighted toward fixed overheads, which bite hard when utilization drops.

• - High fixed costs from depreciation of large-scale manufacturing facilities.
• - Significant variable costs for raw materials, primarily metallurgical silicon.
• - High energy consumption costs for the modified Siemens process.
• - Unit production cost averaged $7.26/kg in Q2 2025, impacted by low utilization.

The fixed cost impact is clear when you look at the idle facility charges. When Daqo New Energy Corp. operated at just approximately 34% utilization in Q2 2025, that overhead got spread thin. The non-cash depreciation component, which is part of that total cost, was about \$1.33/kg in Q2 2025. This is the cost of having massive plants ready to run but sitting idle due to market conditions.

To be fair, management has been aggressive on the variable side. The cash cost-which strips out that non-cash depreciation-was \$5.12/kg in Q2 2025. This improvement, a 4% sequential drop, came directly from a decline in the cost of silicon metal and reduced energy consumption per unit. That shows the operational team is definitely squeezing efficiency out of the process, even when volume is low.

Here's a quick look at how the total cost per kilogram shifted as utilization improved slightly into the third quarter of 2025:

You can see the benefit of higher production levels in Q3 2025; the total production cost dropped to \$6.38/kg, and the cash cost hit a historical low for the company at \$4.54/kg. Still, even with those improvements, the company was operating under significant pressure, with Q2 2025 revenue at just \$75.2 million, reflecting the low sales volume of 18,126 MT compared to production of 29,004 MT in that quarter.

The cost structure is inherently sensitive to energy prices, given the modified Siemens process is power-intensive. Any dip in energy costs, like what helped drive the Q2 cash cost down, provides immediate, though perhaps temporary, relief to the variable portion of the cost base. Finance: draft 13-week cash view by Friday.

Daqo New Energy Corp. (DQ) - Canvas Business Model: Revenue Streams

You're looking at the core engine driving Daqo New Energy Corp.'s financials, which is entirely dependent on the sale of its primary product: high-purity polysilicon.

The primary revenue stream is the sale of this material, the foundational component for solar photovoltaic (PV) cells. For the third quarter of 2025, Daqo New Energy Corp. reported revenues of $244.6 million. This figure represented a significant rebound, climbing from $75.2 million in the second quarter of 2025. This revenue increase was driven by both higher polysilicon prices and increased sales volume.

The operational metrics underpinning this revenue in Q3 2025 included:

• Polysilicon sales volume reached 42,406 metric tons (MT).
• The average selling price (ASP) for polysilicon was $5.80/kg in Q3 2025.
• Polysilicon prices saw a marked recovery, moving from RMB 32-35/kg in June 2025 to RMB 49-55/kg by the end of the third quarter. One specific contract mentioned saw a rise from RMB 30/kg in June 2025 to RMB 55/kg in July 2025.

Daqo New Energy Corp. structures its sales through long-term agreements, which helps smooth out the volatility inherent in the commodity market. These contracts secure volume commitments from customers, often involving a mechanism for monthly price negotiation, allowing Daqo New Energy Corp. to capture some of the upside during market recoveries, as seen in Q3 2025. This structure is critical for managing capacity utilization, which was at 40% in Q3 2025.

The company also utilizes advance payments as a component of its financing and revenue recognition strategy under these long-term agreements. While specific Q3 2025 figures for advances weren't detailed in the primary reports, the balance sheet structure from the second quarter of 2025 indicated the presence of this funding source. Here's a look at the liability side related to customer prepayments from the Q2 2025 filing:

This shows that Daqo New Energy Corp. had $18.2 million (rounded from $18,197 thousand) classified as a long-term advance from customers at the end of Q2 2025. These advance payments provide immediate, non-debt working capital to support ongoing production and capital expenditure needs, like the purchase of PP&E, which totaled $120.3 million for the first nine months of 2025. The company's overall liquidity remains strong, with total cash and investments reaching $2.21 billion as of September 30, 2025.