Daqo New Energy's Subsidiary Xinjiang Daqo Provides Latest Update on its Litigation Event

Rhea-AI Summary

Daqo New Energy (NYSE:DQ) provided an update on its subsidiary Xinjiang Daqo's ongoing litigation case. The lawsuit, filed by Xinjiang Xian'an New Materials and Xinjiang Dengbo New Energy, initially sought RMB1,958.5 million in compensation (later reduced to RMB742.7 million) over a contract dispute regarding silicon core processing services.

After multiple court proceedings, the latest retrial verdict ordered Xinjiang Daqo to pay RMB3.30 million in compensation and attorney fees while rejecting the plaintiffs' larger claims for consequential damages. The case's final impact on Xinjiang Daqo remains pending the final verdict.

Positive

• Court rejected plaintiffs' substantial claims for consequential damages
• Compensation amount reduced significantly from RMB742.7 million to RMB3.30 million in latest verdict

Negative

• Ordered to pay RMB3.30 million in compensation and attorney fees
• Business cooperation agreement with silicon core processing service providers terminated
• Ongoing legal uncertainty pending final verdict

Insights

Legal and Financial Analyst

Daqo faces minimal financial impact from lawsuit as court rejected major damage claims, ordering just RMB3.3M vs initial RMB1.96B demand.

The latest court ruling represents a significantly positive development for Daqo's subsidiary Xinjiang Daqo in its ongoing legal battle with former silicon core processing service providers. While the court affirmed termination of the business cooperation agreement, it ordered compensation of only RMB3.30 million for losses and attorney fees - rejecting the plaintiffs' substantial claims for consequential damages that originally totaled RMB1,958.5 million (later reduced to RMB742.7 million).

This represents a 99.8% reduction from the initial damages sought and only 0.44% of the reduced claim amount. The massive gap between claimed and awarded damages suggests the court found minimal merit in the plaintiffs' core allegations regarding consequential damages. From a financial perspective, the RMB3.30 million award represents an immaterial amount for a company of Daqo's size in the polysilicon manufacturing sector.

While the litigation remains ongoing with potential for appeals, this verdict significantly de-risks Daqo's legal exposure in this matter. The court's consistent rejection of consequential damages claims across multiple hearings establishes a favorable precedent for the company should further appeals occur. The termination of the business cooperation agreement appears to have been accepted by both parties and isn't contested by Daqo, indicating the primary dispute centered on damage claims rather than ongoing business obligations.

SHANGHAI, Sept. 11, 2025 /PRNewswire/ -- Daqo New Energy Corp. (NYSE: DQ) ("Daqo New Energy," the "Company" or "we"), a leading manufacturer of high-purity polysilicon for the global solar PV industry, today announced that its subsidiary Xinjiang Daqo has provided an update on a lawsuit.  

In April 2024, Xinjiang Daqo New Energy Co., Ltd. ("Xinjiang Daqo"), a subsidiary of Daqo New Energy (the "Company"), received a court summons relating to a contract dispute lawsuit filed against it by Xinjiang Xian'an New Materials Co., Ltd. and its affiliate, Xinjiang Dengbo New Energy Co., Ltd. The plaintiffs previously provided silicon core processing services to Xinjiang Daqo. The plaintiffs requested for termination of the business cooperation agreement with Xinjiang Daqo and for compensation from Xinjiang Daqo for their economic losses totaling RMB1,958.5 million (which was later reduced to RMB742.7 million), which consisted largely of alleged consequential damages of the plaintiffs. This litigation was previously disclosed in the Company's annual report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission on April 29, 2024, its press release dated July 17, 2024, and its Form 6-K dated March 17, 2025 and Form 6-K dated April 22, 2025.

In July 2024, the Company received the first instance court's verdict, which affirmed termination of the business cooperation agreement and ordered Xinjiang Daqo to compensate the plaintiffs for their losses and attorney fees totaling RMB3.16 million, while rejecting the plaintiffs' claims for consequential damages. The plaintiffs appealed to the second instance court. In March 2025, the Company received the second instance court's verdict, which vacated the decision of the first instance court and remanded the case for a retrial.

Recently, the Company received the verdict of the first instance court's retrial, which affirmed termination of the business cooperation agreement and ordered Xinjiang Daqo to compensate the plaintiffs for their losses and attorney fees totaling RMB3.30 million, while rejecting the plaintiffs' claims for consequential damages. The litigation's impact on Xinjiang Daqo will be contingent upon the final verdict.

About Daqo New Energy Corp.

Daqo New Energy Corp. (NYSE: DQ) ("Daqo" or the "Company") is a leading manufacturer of high-purity polysilicon for the global solar PV industry. Founded in 2007, the Company manufactures and sells high-purity polysilicon to photovoltaic product manufacturers, who further process the polysilicon into ingots, wafers, cells and modules for solar power solutions. The Company has a total polysilicon nameplate capacity of 305,000 metric tons and is one of the world's lowest cost producers of high-purity polysilicon.

For more information, please visit www.dqsolar.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "might," "guidance" and similar statements. The Company may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond the Company's control. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the demand for photovoltaic products and the development of photovoltaic technologies; global supply and demand for polysilicon; alternative technologies in cell manufacturing; the Company's ability to significantly expand its polysilicon production capacity and output; the reduction in or elimination of government subsidies and economic incentives for solar energy applications; and the Company's ability to lower its production costs. Further information regarding these and other risks is included in the reports or documents that the Company has filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

View original content:https://www.prnewswire.com/news-releases/daqo-new-energys-subsidiary-xinjiang-daqo-provides-latest-update-on-its-litigation-event-302553765.html

SOURCE Daqo New Energy Corp.

FAQ

What is the current status of Daqo New Energy's (DQ) lawsuit with Xinjiang Xian'an New Materials?

The latest retrial verdict ordered Xinjiang Daqo to pay RMB3.30 million in compensation and attorney fees, while rejecting larger consequential damage claims. The case's final impact remains pending.

How much compensation did the plaintiffs initially seek from Daqo New Energy (DQ)?

The plaintiffs initially sought RMB1,958.5 million in compensation, which was later reduced to RMB742.7 million.

What was the outcome of Daqo Energy's (DQ) first instance court verdict in July 2024?

The first instance court ordered Xinjiang Daqo to pay RMB3.16 million in compensation and attorney fees, while rejecting consequential damage claims.

What is the main dispute in the Daqo New Energy (DQ) lawsuit?

The lawsuit is a contract dispute regarding silicon core processing services provided by Xinjiang Xian'an New Materials and Xinjiang Dengbo New Energy to Xinjiang Daqo.