Hello, everyone. I’m Kevin He, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the fourth quarter of fiscal year 2020, which can be found on our website at www.dqsolar.com. To facilitate today’s conference call, we have also prepared a PPT presentation for your reference. Today, attending the conference call we have Mr. Longgen Zhang, our Chief Executive Officer; and Mr. Ming Yang, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang will discuss the company’s financial performance for the fourth quarter and fiscal year of 2020. 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 these 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. Without further ado, I now turn the call over to our CEO, Mr. Zhang.

Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. We are very pleased to report a strong quarter in terms of operational and financial results to bring a successful close of the year 2020. I would like to thank our entire team for their hard work, commitment, and dedication in achieving these excellent results. During the quarter, we produced 21,008 metric tons of polysilicon, a record high in our company's history. Our production cost was reduced by 2.7% in Renminbi terms, primarily due to our efforts in additional energy savings, offset by a higher than expected rise in the cost of silicon raw material in the fourth quarter. The increase in our cost in U.S. dollar terms compared to the third quarter was the result of exchange rate fluctuations due to RMB appreciation. In 2021, we will continue our efforts to reduce cost, as we begin to benefit from our newly implemented digital manufacturing system to maximize our output, optimize our production process, and further improve our operational stability and product quality. During November and December 2020, we saw significant pick-up in polysilicon demand from our customers to meet their increasing production needs to serve the growing solar end-market. During the fourth quarter, we sold 23,186 metric tons of polysilicon, which is the highest quarterly sales volume the company has ever achieved. Since the beginning of 2021, we continue to see rising polysilicon market prices, and most recently, market poly ASP has reached a range of $15 per kg to $16 per kg. As our mono-wafer customers continue their capacity expansion plans supported by robust downstream market demand, we believe that the supply of polysilicon will continue to be very tight throughout the year given very limited additional polysilicon supply this year. Regarding the status of the proposed initial public offering of our Xinjiang Daqo subsidiaries in China’s STAR market, the stock listing committee of the Shanghai Stock Exchange STAR Market reviewed Xinjiang Daqo’s application on February 2, 2021, and determined that Xinjiang Daqo had already met the offering, listing, and disclosure requirements related to its potential STAR Market IPO. As the next step, Xinjiang Daqo will need to go through the registration process with the China Securities Regulatory Commission before the STAR Market IPO can take place. The proceeds of its potential IPO will be used to fund our Phase 4B polysilicon project with an annual capacity of 35,000 metric tons. We have already started the preparation works for Phase 4B, including the design and procurement process. We plan to start the construction in mid-March and expect to complete the project by the end of 2021 and ramp it up to full capacity by the end of Q1 2022. I have been in the solar industry for over a decade, and the prospects for the solar industry have never been brighter. Driven by the dual trends of solar grid parity and the urgent need to address climate change, the industry is on the cusp of undergoing tremendous growth over the next few years without the need for government subsidies. Solar energy is now one of the most competitive forms of power generation, even compared to fossil fuel, and we are beginning to see real-world applications where solar is the optimal choice to meet growing energy needs and to replace legacy carbon-based generation. Major economies around the world have also begun to implement ambitious policies and initiatives to support and mandate the use of renewable energy for power generation. The European Union has announced its Green Deal to fight climate change through progressive policies for a climate-neutral and sustainable EU with the goal of no net emissions of greenhouse gases by 2050 and to de-carbonize the energy sector. Over the next few years, the European Climate Law is expected to turn this political commitment into a legal obligation. In China, President Xi Jinping has announced that China will aim to hit peak emissions before 2030 and reach carbon neutrality by 2060 and we expect various government agencies, including the NEA and the NDRC to introduce and implement policies to mandate and support the use of renewable energy. For 2021, the NEA has indicated its intention to accelerate the development of wind and solar energy, with a goal of adding a combined 120 gigawatts of wind and solar in 2021. In the U.S., with the Biden administration’s commitment to fight climate change and plan for a clean energy revolution with the goal of achieving a 100% clean energy economy and reaching net-zero emissions no later than 2050, we believe favorable policies are forthcoming to support renewable energy’s growth in the U.S. We are standing at the beginning of a new era that will demand more and more clean, renewable, and cost-effective energy resources among which solar PV is one of the most competitive. We will focus on our core business, continue to expand capacity, and further improve quality to better serve the fast-growing solar PV market. Now, let me discuss our outlook and guidance for our future. The Company expects to produce approximately 19,500 metric tons to 20,500 metric tons of polysilicon and sell approximately 20,000 metric tons to 21,000 metric tons of polysilicon to external customers during the first quarter of 2021. For the full year of 2021, the Company expects to produce approximately 80,000 to 81,000 metric tons of polysilicon, inclusive of the impact of the Company’s annual facility maintenance. Now I will turn the call over to our CFO, Mr. Yang, who will discuss the Company's financial performance for the fourth quarter and fiscal year 2020.

Thank you, Longgen. And hello, everyone. Thank you for joining our call today. Now I will discuss our Company's financial performance for the fourth quarter of 2020. Revenues were $247.7 million, compared to $125.5 million in the third quarter of 2020 and $118.9 million in the fourth quarter of 2019. The 97% increase in revenue in the fourth quarter compared to the third quarter was primarily due to higher polysilicon sales volume and higher polysilicon average selling prices. Gross profit for the fourth quarter was $109.5 million, compared to $45.3 million in the third quarter of 2020 and $35.1 million in the fourth quarter of 2019. Gross margin was 44.2%, compared to 36% in the third quarter of 2020 and 29.5% in the fourth quarter of 2019. The increase in gross margin was primarily due to higher ASPs. Our polysilicon average production costs was $5.92 per kilogram in the fourth quarter, compared to $5.82 per kilogram in the third quarter. The slight increase in ASP was primarily the result of RMB appreciation versus the U.S. dollar during the quarter. In RMB terms, our production costs in Q4 were reduced by 2.7%, as compared to Q3, primarily as a result of improvements in energy and operational efficiencies, despite a higher than expected rise in silicon metal raw material costs in the fourth quarter. Selling, general and administrative expenses were $11.2 million, compared to $9.2 million in the third quarter of 2020 and $9 million in the fourth quarter of 2019. The increase in SG&A cost was primarily due to an increase in shipping costs as a result of higher sales volume for the fourth quarter, as well as an increase in personnel cost. SG&A expenses during the quarter included $4.5 million in non-cash, share-based compensation costs related to the Company’s share incentive plan. R&D expenses for the quarter included projects related to quality and purity improvements for N-type polysilicon, as well as other technology upgrade projects that can vary from period to period reflecting R&D activities that take place during the quarter. Income from operations was $98 million, compared to $33.3 million in the third quarter of 2020 and $30.1 million in the fourth quarter of 2019. Operating margin was 39.6%, compared to 26.6% in the third quarter of 2020 and 25.3% in the fourth quarter of 2019. Interest expense was $8.3 million, compared to $5.4 million in the third quarter of 2020 and $3.9 million in the fourth quarter of 2019. The increase was primarily due to an increase in interest charges, as well as bank fees related to Chinese bank notes. EBITDA was $115.1 million, compared to $51.6 million in the third quarter of 2020 and $45.4 million in the fourth quarter of 2019. EBITDA margin was 46.5%, compared to 41.1% in the third quarter of 2020 and 38.2% in the fourth quarter of 2019. Net income attributable to Daqo New Energy Corp. shareholders was $72.8 million, compared to $20.8 million in the third quarter of 2020 and $20.1 million in the fourth quarter of 2019. Earnings per basic ADS were $1.01, compared to $0.29 in the fourth quarter of 2020, and $0.29 in the fourth quarter of 2019. Now on the Company’s financial condition. As of December 31, 2020, the Company had $118.4 million in cash and cash equivalents and restricted cash, compared to $109.8 million as of September 30, 2020. And as of December 31, 2020, the notes receivable balance was $0.2 million, compared to $1.9 million as of September 30, 2020. As of December 31, 2020, total bank borrowings were $193.7 million, of which $123.2 million were long-term borrowings, compared to total bank borrowings of $271 million, including $140 million long-term borrowings, as of September 30, 2020. For the 12 months ended December 31, 2020, net cash provided by operating activities was $209.7 million, compared to $181 million in the same period of 2019. And for the full year 2020, net cash used in investing activities was $118.5 million, compared to $261.8 million in the same period of 2019. The net cash used in investing activities in 2020 and 2019 was primarily related to the capital expenditures on the Company’s Phase 4A polysilicon project. And for the 12 months ended December 31, 2020, net cash used in financing activities was $95.5 million, compared to net cash provided by financing activities of $102.3 million in the same period of 2019. Now on the Company’s full-year 2020 results. Revenues were $675.6 million, compared to $350 million in 2019. The increase in revenue was primarily due to higher polysilicon sales volume, as 2020 polysilicon sales volume increased to 74,812 tons, as compared to 38,110 tons in 2019. Gross profit was $234 million, compared to $80.1 million in 2019. Gross margin was 34.6%, compared to 22.9% in 2019. The increase in gross margin was primarily due to lower polysilicon production costs. Selling, general and administrative expenses for 2020 were $39.5 million, compared to $32.9 million in 2019. The increase in SG&A expense was primarily due to an increase in shipping costs as a result of higher sales volume, as well as an increase in personnel cost. R&D expenses were $6.9 million, compared to $5.3 million in 2019. Income from operations was $187.9 million, compared to $47.5 million in 2019. Operating margin was 27.8%, compared to 13.6% in 2019. Net income attributable to Daqo New Energy shareholders was $129.2 million, compared to $29.5 million in 2019. Earnings per basic ADS were $1.82, compared to $0.43 in 2019. Adjusted net income attributable to Daqo New Energy shareholders was $147.1 million, compared to $47.4 million in 2019. Adjusted earnings per basic ADS were $2.07, compared to $0.70 in 2019. And that concludes our prepared remarks. Operator, now we would like to open the call to questions from the audience.

Thank you. We will now begin the question-and-answer session. The first question is from Gary Zhou with Credit Suisse. Please go ahead.

Thank you. Thanks for taking my questions. And congratulations on the strong results. I have two questions. So firstly is on the polysilicon price outlook. So we noticed that there has been a significant polysilicon price hike after Chinese New Year, so from around RMB90 to around RMB100 last week. So can management share with us your latest view on the near-term polysilicon price outlook for the next few weeks? And if you can also share your estimate for the second quarter this year and also the second half of this year? And the second question is on inventory. So wondering if management can share with us the company's latest polysilicon inventory, and if you have also some information, the inventory level add to your competitors and also add to the wafer companies? Thank you.

Hello, Gary. To start, in January, our average selling price, including the value-added tax, was approximately RMB80 per kg, which increased to around RMB81 in February. Currently, in March, we are selling for more than RMB100, and particularly this week, our price is about RMB120 per kg. This translates to over $16 per kg without the value-added tax. The increase is attributed to a lack of new polysilicon supply this year, while demand is strong, driven by various wafer expansion projects. Recently, we've announced two long-term contracts, one with Zhonghuan and another with Wuxi Shangji. Most of the volume from these contracts—around 90%—is projected for 2022 through 2024, with little impact this year. There's growing concern that demand might exceed supply into the middle of next year, leading to weekly increases in polysilicon prices. We expect the average selling price for the second quarter to be between RMB120 and RMB130 per kg, and for the second half of the year, we anticipate it to remain above RMB120 per kg. While I can't predict exact numbers, it's important to note that polysilicon costs account for around 15% to 16% of module costs. The overall project costs are further influenced by glass, which today makes up roughly 18% to 19% of module expenses. Therefore, we don't believe small increases in polysilicon prices will significantly impact module prices. Currently, the major selling price is around RMB1.7, and we still see demand, particularly within China. We believe that polysilicon prices may remain high, probably around RMB100 per kg, through the first half of next year. After mid-next year, the outlook will depend on market demand and the speed of wafer expansion and polysilicon supply addition. Looking ahead to next year, LONGi's capacity is expected to reach around 35,000 tons and possibly up to 80,000 tons later on. Other companies, such as Asian Silicon, are also planning expansions. Overall, we don't expect a significant increase in supply next year, with perhaps some relief in 2023. This year, the silicon supply and demand remain tight, and that situation is likely to persist into the middle of next year. Now, let Ming address the second question regarding inventory.

Okay. Hi, Gary. So let me discuss quickly about our inventory level. So I think you remember, at the end of Q3 because of a delay of order from a particular customer, I think our inventory was a bit harder than normal. So it was running more than three weeks of inventory at that time. I think during Q4 as demand improved and orders normalized, especially in December with very strong orders from our customers. So inventory has reduced to less than two weeks, approximately 10 days or so. So that's already a normalized level of inventory. And then by now our inventory is running at very lean levels. So it's less than a week of inventory right now, which is really the minimum level that we need to prepare products for the different grades and to ship to different customers. So we're running, at basically on minimum level of inventory right now of less than a week. And I think across the industry and also our customers, we're also seeing very lean inventory levels currently.

Okay. Thanks very much. This is very helpful. Thank you. This is very helpful. And I’ll pass on. Thank you.

Great. Thank you.

Thank you.

Next question is from Karl Liu of CICC. Please go ahead.

Hi. Thanks, management for taking my question. I only got two questions. The first, yeah, I think we have no doubt about the potential price trend this year. But we are seeing some current change on the demand weakness, especially in March. I think we have some channel checks showing the modules company has already cut their capacity utilization recently, so could you please give us some colors on the current market dynamic? And do we think the current price growth trend will slow down? Or do we expect price to stabilize reasonably? I mean, we have no doubt about the whole price trend this year, but how about the reason to be? So do we expect that changing the modules will have some pressures on us? And the second question is about the prepayment. So we know we have some prepayment we signed with the customer. So could you please share that prepayment percentage we have signed with the customer or maybe just some colors that we can - for example, how much money we can – a bump payment we can receive when we sign a contract with our customers? That's all my question.

Karl, I think first question, I think, you know, today basically - okay, module market, I think the European - Europe and the US market is still is very hot. Like I said and I think, you know, obviously you’re selling around $0.25 I think per watt feels good. The only thing so I know, China, I think right now is increased to 1.65, 1.7 and it looks a little slight, the reason is because everybody waiting for NEA, the two conference meeting, you know, the new policy. But definitely, I think after mid-April, definitely, I think China demand will be quickly come back. That’s I think for certain. But to answer your question, yes. I think the module selling maybe was sold out in China, within one month. But if you look at the inventory, maybe some inventories type sale. And the reason is why because I think right now, we were today, almost mono-wafer no inventory, as we told. I think then also some - I think some company, okay, I think keep a high - in order to keep a high gross margin, basically they continue to increase the wafer prices. I'm not sure you know, how long they can continue doing that, okay, basically what I say in some segments because unbalanced gross margin and kind of pass-through through the middle industry, what I say is the wafer sale and module, and a cost may be temporary, the module, I think selling maybe a little slow down. But for further - for the future, you see, I think a module just like the building, as you build up, you always can sellable okay, only is the price. So finally, you were selling the module, maybe at lower price, right? The only thing is, who is going to lose money, or not say lose money, maybe adjusted the gross margin in certain areas, to lower down their gross margin. So what I think is in the future, wafer gross margin should be good and, you know, should be - the module should be - gross margin should be reasonable to reach a reasonable margin to push the you know, the module continue to sell it. So I'm not worried about just ourselves, you see, even polysilicon prices continue to go up 10, 20 per kg. But that factor, you know, the final products only little. If we increase $10 - RMB10 per kg, maybe only increase the module price, you know, 0.5%, 3%, 0.3% this will not affect too much. The effect is less than the glasses prices right now affect the module. So what I think is because of demand and supply, the market mechanism, you know, for us, because we are chemistry industry, it's hard, long term investments, you know, it's intensive capital investments. So it's hard to - in time to one time, you know, to increase the capacity. So, as you know that the demand supply is there. So even this year, all the polysilicon produced only maybe can support I think, around 150 gigawatts. So - but as you can see, the wafer capacity continued expansion by the end of this year in China maybe reached to more than 400 gigawatts. So we don't know, basically, you know, but I can tell you is, the market is there, China will continue to go up. Even NEA today, the head of the NEA just said, we will detail lay down the policy and to encourage, I think, wind, solar industry and encourage each provincial level to continue to develop, you know, adding showing more than our original planning, the national wide, maybe, you know, 60, 80 gigawatts. So I think that's - I think I'm very confident, I think of China market. Secondly is the prepayments. We signed I think two long term contracts, one is with Zhonghuan. And Zhonghuan is a contract that is signed actually - Zhonghuan before Chinese New Year. So we based that time, I think we collect 5% of the current price, the total contract value. And for Shangji basically we - based on right now - I think the week before last week, the average selling price we collect a 6% I think the down payment. So we are going to sign another contract, also continue keep 6%. So you can see that, the only things that we signed under the contract, majority is for the next three years, is not for this year, okay? This year, we’re just going to squeeze, maybe beginning inventory, maybe the end of the year, you see our 4B or even, you know, December, or maybe we'll book some next year, January quantity. There are some contracts we have adjustments 10% up and down. So we still can - I think, do something, I think, you know, to help some company, especially, like, I think some company, they are sizable in the future. And our strategy is, in the future one client cannot account for more than 20% of our sales.

Thanks for taking the - thanks for your answer. I actually have a follow-up question on your outlook. So, it's interesting we have noticed that the wafer price has always like banding with the polysilicon price, while the polysilicon price go up, the wafer price always follow-up and go up. And - but if we look at the capacity, should see some, like, yeah, the overcapacity, or the competition on the wafer side, but actually in the price level, we didn't see that. And so could you give us some color on that? Do you think it's just something will definitely happen, but it's just not happen though? Or do you think it's because currently the sales diversity is not big enough. So, we still have – I mean, the whole industry, the polysilicon industry do have the sales or contract with the leading player. So actually, the second tier players cannot get enough the polysilicon, so even they have planning to build up more capacity, but actually they cannot produce more wafer. What do you think about it?

Yeah. I think, you know, as the module assembling growth module right now is lower. So it's not discouraged, I think of the module sales in China temporary. But if we look at the sale, I think inventory is there. I think some company, maybe the big - in the history, they almost manipulate the wafer capacity. But in the future, right now, they're vertically integrated. If they kind of selling wafer, you know, all in the module, I think it's okay. But if they continue to increase the price of the wafer, you know, if they kind of selling the module, you know, what's the next step? They have to reduce the module, wafer price? All right. So I think that's the time, only the time can tell you. So I'm not going to do any comments. I think the stock price tells everybody, right?

Okay. Yeah. Thank you very much. That's all my question.

Thank you.

Thank you.

Next question is from Philip Shen with ROTH Capital Partners. Please go ahead.

Hi, everybody. Thank you for taking my questions. The first one is just a follow-up on the outlook for China's demand. Can you share what you think the overall demand will be this year? Do you think it will be 60 gigawatts? Or do you think it's 80 gigawatts, for example? And perhaps some talk about what that split might be by quarter?

Philip, I think, you know, I'm very optimistic about China, even though the – I think the dropped didn't say any target for national level, but I think it's encouraged, I think the each provincial to develop, I think their own targets. Then today, in the two conferences in Beijing today, the head of the NEA, basically, you know, sets the targets there, I think around - I think 1200 gigawatts in the next 10 years. So, as you can see that, I'm pretty sure especially the distributed, you know, the rooftop and the distributed I think power - solar power plants in China is continued to develop. I think this year definitely should be above 60, even about 80 gigawatts.

Great. Thank you, Longgen. And I think you guys are very - I mean, fully booked for 2021 for 2022, I believe with the new contracts you might be fully booked as well. So would love to get some additional color on how you're thinking about capacity expansion. And clearly with the China listing, you're going to raise money for the - for Phase 4B expansion. Can you talk about the expectations for CapEx for Phase 4B? I believe it's maybe $13,000 or sorry, 13,000 per metric ton…

Okay. I think, Philip, I think, you know, the only things I can tell you is, we are continuing to expansion. As you say see right now, the information, even right now, we're still not listing IPO, but we use our own money already starting 4B. 4B design capacity is 35,000 tons. But that is integrated to our existing I think plants. So we think the extra output should be 40,000 tons. Basically, this year, we already given guidance, 80,000 to 81,000 metric tons. So next year, I think it's not the final, I think, we can see, if we can, you know, climb the - ramp the 4B capacity quickly, I think next year, our plan, okay, is going to increase capacity 50% reach to 120,000 tons for next year. So that's, I think, two years plan. For the - you know, beyond the two years, we also, and as you see that, we are planning right now the IPO in China stock market. So far we don't know the valuation, but we're very optimistic, and we can raise – I think right now the estimate is RMB5 billion. I think if we can raise more than that, definitely, I think, you know, use our own current, you know, free cash, then you know, this year, I think net profit plus, I think the depreciation or EBITDA or whatever, we think we can continue to planning expansion. That we cannot tell you how much, and we are looking - beyond Xinjiang, we are looking at other places right now. And maybe we are looking, another 40, or even 80, or even 1000 tons new plant. So, I think that's what we're waiting for, basically based on the proceeds of the IPO, the timing, and also the market situation.

Great, thank you. Can you give us a little bit more color on the China listing in terms of timing? When do you expect that to be - the CSRC to give you the final approval? And then one last question, as it relates to your cost structure, I think you mentioned that, it went up a little bit in Q4, because of currency. What's your expectation for cost per watt in Q1? And then what does that - how does that trend in 2021?

I will pass the cost details to our CFO, Ming. Regarding the IPO, we have already received approval from the STAR Market Review Committee as of February 2nd. We meet all the listing requirements, and we are currently in the registration phase. We believe we may complete the registration by the end of this month, with the hopes of listing on the Chinese stock market by the end of April or early May. As for the total investments for 4B, since we are integrating with existing plants, the total investment is approximately RMB3.5 billion. The total investment for 4A is around RMB2.9 billion, reflecting an increase of about RMB500 million to RMB600 million due to higher capacity in some areas exceeding 35,000 tons. After integrating with the existing system, the capacity should exceed 120,000 tons in terms of actual output.

Okay. Hi, Phil. In terms of our cost structure, so for Q1, we're expecting our costs in terms of RMB to be roughly similar to our costs in Q4, maybe just slightly higher because of high silicon metal costs. And I think in terms of movements in the U.S. dollar, I think because of the current continued appreciation of RMB, I think we could see maybe a 3% to 4% increase in costs in U.S. dollar terms in Q1 relative to Q4 of last year. So that's what we're seeing right now.

Right. So that's for Q1 and Ming, what do you think about Q2, 3, and 4? What is the trend of the cost structure? Thanks.

Okay. We think costs for the remaining of the year should be similar, at least for Q2 and Q3 should be similar to Q1, and then costs should come down by Q4, assuming constant U.S. currency exchange rate.

Okay…

But 4B, its for the 4B totally ramp up, our costs will continue to at least cutting 5%.

Yeah. 5% plus type of reduction from current cost.

Okay. Great. Appreciate it. Thank you. And I'll pass it on.

Great. Thank you.

Next question is from Colin Yang with Daiwa Securities. Please go ahead.

Good evening, investors. This is Colin from Daiwa. My first question is somewhat similar to Philip’s. I believe the market does not have concerns for another exceptional earnings report in 2021 due to the limited operations across the industry. However, there are growing worries about the outlook for 2022, particularly with major competitors like Tongwei and Suntan announcing aggressive capacity expansion plans. There is a genuine concern about potentially losing market share if we do not expand. Are we planning to announce another expansion plan, and will this be supported by a share placement or debt financing? That’s my first question. My second question is about FBR, as I have noticed there are quite different reviews regarding FBR from Tongwei and GCL-Poly. What is our perspective on FBR, including additional security costs? Thank you.

Colin, for the first question, I will compare our situation to Tongwei's. Currently, Tongwei has around 80,000 tons of capacity, but it’s important to note they have also engaged in equity investments with other companies like LONGi and Trina Solar. They claim a capacity of 290,000 tons for 2023, but we are unsure how much of that is actually sellable. We believe a significant portion, potentially more than 1,000 tons, will be internally used for their wafer and module sales. Our expansion appears reasonable based on our financial position. We plan to execute the 4B expansion and hope to begin production by the end of this year, aiming for a nearly 50% capacity increase to 120,000 tons next year to meet client demands. Currently, nearly all major wafer producers have signed long-term contracts with us, including LONGi, Jinko, Trina, Canadian Solar, and soon an additional company. This strong client relationship is essential not only in terms of production volume but also product quality. We are confident in our ability to continue expanding and strengthening client relationships. Regarding FBR, we won’t comment on another Hong Kong-listed company's FBR operations. We pride ourselves on being transparent with our cost structure and product yield rates, but we don’t have insight into their cost structure or yield rates. They already have a production line capable of 10,000 metric tons, but we’re uncertain about their actual output. We do not utilize FBR polysilicon, but we keep in regular contact with our clients about these issues. It’s evident that there is still significant room for improvement in the quality of FBR polysilicon compared to our modified Siemens technology. One of our clients who has committed to FBR also just signed a long-term deal with us and provided a 6% down payment, indicating positive prospects for both methods and allowing us to evaluate which is superior.

Thank you, Longgen.

Great, thank you.

The next question is from Alan Han with JPMorgan. Please go ahead.

Hi, I have two minor questions since most have been answered. I observed that in the fourth quarter last year, the realized price was around US$10.8. If we consider the average from PV and silicon in China, it appears that the average price might be slightly higher. I want to understand why this is the case. Is it because we had a slightly higher sales volume in December when the price was relatively lower?

I think Alan, I think mostly important. If you'd look at our you know, the structure of our product sale in Q4, we're selling I think our products is around the 20, I guess, 23,186 metric tons, almost 100% we are more on that product. If we compare our Q3, we - our product you see the modular product still is 98%. So basically, we selling most is right now that I think on a mono-silicon. Then also, of which, we certainly mostly is the high-quality mono-grade, I think, polysilicon. As you can see that even mono-silicon classified, I think, right now is 4, I think, products. So we have - majority right now is selling the highest price. So that's why our ASP is higher, I think around like a $10.80. So I think that's my answer. Basically, I think we will continue to enjoy that. The reason is I said, I think last year, mid of last year, we adopted I think a major - digital management, even let's say in the deposit processing, we use, you know, a single box to do the AI calculation. Okay, I think the technology. So right now, our mono-silicon product, I think every month we’ll produced is about 99%.

And just follow-up to what Longgen said, I think Alan, I think you're right in Q4 was a little bit unique. And we did sell more volumes in December than during the month of October or November. I think part of the reason was one, some of our customers were taking advantage of very attractive pricing at the time, and they also they were preparing for a building of additional volumes for production during the Chinese New Year. Yeah, so that's where the ASP came in.

Got you. And my second question, and also my last one, is that, I noticed in your other operating income have declined from US$5.5 million in 2019 to US$0.2. I mean, looking at periods like years how trends, it usually doesn't trend to almost zero. So just want to get a sense of why over there.

Okay, so other operating income historically is most of, for example, R&D grants and technology grants from various government agencies, okay, and for this year, it just so happened that these were less than previous years, okay. And actually, I think for future periods, we would expect levels that actually would be more similar to the - our current year, the lower levels than previous years.

Well, limited to the current year, but not the previous years?

And other previous years, yeah.

Got you. I guess, I will pass it on. Thanks.

Great. Thank you.

The next question is from Chao Ji with Goldman Sachs. Please go ahead.

Hi. Thank you for taking my question. I remember you said that a part of your R&D in 2020 was spent on the research of anti-product. So can you please share with some color in terms of progress or anti-poly? Thank you.

Okay. So basically, we are doing R&D to improve purity levels. The N-type requirements are much more stringent than the standard monotype levels. And right now, because of the strong demand from our customers, so we are optimizing our overall production for the monotype polysilicon, but we do expect starting - effectively starting this year, and through the next, say two years that the demand for anti-wafer and translating to anti-poly will increase in over this time. So we are doing R&D efforts to increase the share of anti-poly from our production. And one of the key goal is to increase the level of production in terms of percentage and the same time with our significant impact to our production costs. So that's our current target right now.

Sure. Thank you so much.

Great. Thank you.

Your next question is from Tony Fei with BOCI Research. Please go ahead.

Hi, management. Thank you for your time. My first question is about your 1000 tons semi-grade capacity. I know it’s still in the early stages, but could you share your expectations regarding the quality, average selling price, and the addressable market for this project? Will it be commissioned simultaneously with Phase 4B? My second question is about your maintenance schedule for this year. Which quarter will it occur in, and how much production volume will it impact in that specific quarter? Thank you.

I would like to address the first question about the 1000 metric tons of semiconductor grade polysilicon, which is part of the IPO proceeds and is contingent on the success of the IPO. We believe it is the right time to initiate this production line. We plan to enter into a joint venture with a well-known company in the downstream semiconductor wafer industry to collaborate on this project. Our focus is on producing the highest quality polysilicon, specifically targeting 12-inch semiconductor wafer quality. Unlike our competitor that begins with lower quality materials, we aim to provide superior products. We will provide more details on the timing and specifics once our IPO is successfully completed. Regarding annual maintenance, it is typically scheduled for the third quarter. This maintenance will not impact our current guidance for the year, which is between 80,000 to 81,000 units of output, as we have taken the maintenance into account in our forecasts.

Okay. Thank you, Longgen.

Okay. Thank you.

The next question is from Dora Lu with JPMorgan. Please go ahead.

Hi. I guess most my most of my questions have been asked, so I just follow up with two minor questions. And the first one is related to our long-term contracts. So could you share with us what is the percentage of our 2021 production volume which has been secured by the long-term contracts? And the second one is more related to the financial statements? I noticed that note receivables in 2020 has dropped significantly? So could you share with us the reason? Thank you.

Okay. I believe I answered your first question. Currently, we've signed two clients and secured another long-term contract with a major wafer producer. We have nearly booked our full 2021 capacity. We might sign another contract in the second half of the year, which could allow us to set some quality for our bookings in 2022, 2023, and 2024. In summary, for 2021, we expect an output of 80,000 tons, almost fully booked. As for your second question, our CFO, Ming, will address that.

Okay, so especially the note receivables number came down, so during the end of the year, we actually paid down a number of our Chinese bank loans as the one source of the funding is from the notes receivables, we converted it to pay down Chinese bank loan, so that's why you saw the balance came down.

Yeah, thank you so much. That's very clear.

Great. Thank you.

The next question is from Robin South with CNBM. Please go ahead.

Thank you management for taking my question. I would like to ask about the customers' inventory level for polysilicon. Do you think that your clients are building up inventory in build up coming supply shortage? This is my first question.

Okay. First of all, I'm not sure if you know whether our clients are building inventory or not. But you can see that there are major players in the wafer industry right now. I believe LONGi, Xinjiang, and Jinko are not building inventory on wafer settlements. They are selling all of their products or integrating them into modules. This year, the total polysilicon capacity can only support around 150 or 160 gigawatts of final products. We might be making some efforts to import polysilicon. Last year, some inventory may have accumulated, affecting this year's end products. As of today, I don't think there is any inventory among US polysilicon producers like Daqo or Tongwei, except for Tongwei, which is vertically integrated. I also don't think other companies have inventory sitting around. Similarly, I doubt that wafer producers like Jinko or Xinjiang have any wafer inventory either.

Okay, thank you. Very clear. My second question is about the payment terms. So given that the supply is quite tight and downstream is running short of polysilicon, so do we getting better payment terms for polysilicon sales?

We're still I think, like the usual, you know, to us, I think if you can see most all deliveries upon you paid. So most right now, yes, we accept their banking notes. And when we accept banking notes, plus, I think of the cash, okay, the remittance. So basically, we upon that. So right now, because of the supply and demand, so we maybe, you know, in each and in quarter month, we will be asking for more remittance cash, rather than the banking, I think dropped. So, I think that's what I'm doing. But basically, I think our delivery is upon the cash received. I think as you know that, banking notes also is very - just like cash.

So basically, right now, what happens is - so one is. customers are willing to sign long term contracts and pay a higher prepayment, per kilogram or a higher percentage of prepayment for the contract. So I think that's really a sign of customers are really willing to pay upfront, you know, to secure supply. And then another situation we're seeing right now is that, actually we usually contract around the end of the month or next month volume. And actually customers now are eager to pay us ahead, after the contract is signed, so that you know they could get on the delivery list. So that they could get earlier delivery of polysilicon for their order as well.

So, basically, you know, Ming just said, I think the first one most important, we right now, I think take the advantage of that you know, the supply, tide supply. So, we are going to sign some contracts, basically, I think a majority of quantity is forecast, I think next three years. So we collect high percentage of down payments, I feel that's what we are doing right now, to lock in the future.

Okay. I have one more question regarding the competition landscape. So, what do you see in the relatively longer-term development for this polysilicon supply business? So, do you think that there will be a big player and several smaller ones with roughly equal capacity or you expect will have four to five manufacturers with similar scale? And the second following question about is this, what would be Daqo’s long term market share target in this supply?

The silicon industry differs significantly from others, including the solar industry, such as wafer sales and modules. We operate in a chemical sector that requires substantial capital investment and long-term commitment, as reflected in our balance sheet. Additionally, there are strict environmental and safety requirements to consider. Last year, in Q2, our selling price demonstrated that we were one of the few making a profit while other players in the industry were at a loss. This industry isn’t as straightforward as it seems; for instance, glass technologies are less advanced than polysilicon. It's also important to note that even well-capitalized players, such as Jinko, have struggled to maintain quality compared to newer entrants. Looking ahead, it’s likely that only four to five major players will remain in this sector, and those will continue investing in and expanding their capacities. Tongwei is one of the larger players and is vertically integrating its operations. The future remains uncertain regarding the extent of vertical integration in polysilicon; it's unclear how much will be kept in-house versus sold in the market. Daqo intends to focus exclusively on being a pure polysilicon producer without venturing into downstream activities. We aim to remain a key player, and while Tongwei is significant, the possibility of other Asian polysilicon producers going public raises questions about their capacity to raise funds and compete effectively. Overall, there are still major players left in this landscape.

Okay. Thank you, I will pass on the question.

Great, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Kevin He for any closing remarks.

Thank you, everyone again for participating in this conference call. Should you have any further questions please don't hesitate to contact us. Thank you. And bye-bye.

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.