Daqo New Energy Subsidiary Receives Retrial Verdict in Contract Dispute

Daqo New Energy Unit Faces $463,000 Payment in Contract Dispute Retrial

Daqo New Energy (NYSE: DQ), a prominent supplier of polysilicon for the solar industry, announced that its subsidiary, Xinjiang Daqo, has received a retrial verdict in a long-standing contract dispute. The verdict orders Xinjiang Daqo to pay 3.30 million renminbi (approximately $463,000) in damages and legal fees, a figure significantly below the initial claims made by the plaintiffs.

Retrial Details and Prior Proceedings

The dispute originated from a lawsuit filed in April 2024 by Xinjiang Xian'an New Materials Co. and its affiliate, Xinjiang Dengbo New Energy, which had previously provided silicon core processing services to Xinjiang Daqo. The plaintiffs sought to terminate their business cooperation agreement and initially demanded a substantial RMB 1.96 billion in compensation, primarily for alleged consequential losses. This amount was later reduced to RMB 742.7 million.

In July 2024, a lower court ruled in favor of terminating the agreement and ordered Xinjiang Daqo to pay RMB 3.16 million, while crucially rejecting the larger claims for consequential damages. Following an appeal by the plaintiffs, a higher court in March 2025 vacated the initial ruling and sent the case back for a retrial. The recently delivered retrial verdict largely mirrored the first instance, affirming the termination of the contract and increasing the damage award slightly to RMB 3.30 million, once again rejecting the extensive claims for consequential damages.

Market Reaction and Analyst Perspectives

The financial implication of this retrial verdict, amounting to approximately $463,000, is considered minor in the context of Daqo New Energy's overall operations. Analysts suggest this amount is unlikely to materially impact the company's broader financial health or liquidity, viewing it as a contained operational cost rather than a strategic impediment.

However, market sentiment regarding Daqo New Energy remains complex. Wall Street analysts, based on a consensus from 11 brokerage firms, hold an average recommendation of 2.1, translating to an "Outperform" rating. The average one-year price target stands at $28.39, suggesting a potential upside of 7.52% from the current trading price of $26.40.

Conversely, the GuruFocus GF Value presents a more cautious outlook, forecasting Daqo's value at $12.30 in the coming year. This implies a potential downside of 53.41% from current levels, reflecting an assessment based on historical trading multiples, past growth patterns, and anticipated future performance. Similarly, TipRanks' AI Analyst, Spark, assigns a "Neutral" rating, citing challenges such as declining revenues, profitability, negative cash flow, and bearish technical indicators.

Broader Context and Implications

As a leading manufacturer of high-purity polysilicon for the global solar PV industry, Daqo New Energy operates within a dynamic and competitive landscape. The successful rejection of the plaintiffs' significant claims for consequential damages in both the initial and retrial verdicts has significantly limited the financial exposure for the company. This outcome underscores the importance of legal due diligence and risk management in complex contractual agreements within the industry.

The company has consistently disclosed updates on this litigation in its SEC filings, including its annual report on Form 20-F and various Form 6-K submissions, demonstrating transparency regarding its legal challenges.

Looking Ahead

The ultimate financial impact on Xinjiang Daqo remains contingent upon the outcome of any further legal proceedings, although the repeated rejection of substantial consequential damages provides a degree of financial certainty. Investors will likely continue to monitor Daqo New Energy's operational performance and broader market conditions within the solar PV industry, as these factors are expected to exert a more significant influence on the company's future guidance and stock performance than this specific legal settlement.