Welcome to the DACO 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 2. Please note this event is being recorded. I would now like to turn the conference over to Jessie Zhao, Investor Relations Director. Please go ahead.

Hello, everyone. I'm Jessie Zhao, the Investor Relations Director of Darko New Energy. Thank you for joining our conference call today. Darko New Energy just issued its financial results for the second quarter of 2036. 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 Mr. Xu and then Mr. Yang will discuss the company's financial performance for the quarter. After that, we will open the floor to put an 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 US 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.

Hello everyone, this is Anita, and I'll now translate our Chairman Mr. Zhu's remarks. In the second quarter of 2026, market sentiment across the solar PV industry

remain cautious to meet domestic demand and elevated employee 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 and Xiaoxi, Xiaoxi, Xiaoxi. to navigate the current market downturn. On the operational front, we continue to take proactive measures to navigate challenging market conditions, with our namesake capacity utilization rate operating at approximately 57% during this period. Total production volume at our two political facilities was 43,675 metric tons per quarter, exceeding our guidance range of 35,000 metric tons to 40,000 metric tons. with policies and market prices remaining below production costs since the first quarter of 2026. We initially refrained from engaging in the 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 Policy. 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 MTC last quarter to 15,190 MTC, with average selling price falling to 4.04 USD per kg. Our policies and transactions and shipment volumes have continued to pick up in the third quarter, reflecting increased confidence in the quality and an ongoing preference for products from customers. On the cost side, total production costs remain flat sequentially at $5.95 USD per kg, with cash costs edging down by 0.4% to $4.57 USD per kg. In manufacturing costs, the RMD term declines slightly. In light of the current market dynamics, we expect total policy comp production volume third quarter 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 160,000 metric tons to 180,000 metric tons. Pulse welcome market prices came under further downward pressure during the second quarter, with unpaid pulse welcome prices falling 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. Amidst the huge demand, depressed pricing, and accumulating industry-wide inventories, Hall System Producer operated a low utilization rate with aggregate output of 5,308,000 metric pounds in the first half of 2015, representing a 9.8% year-on-year decrease. As we make our way through the third quarter, the continued 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 setting energy consumption limits per unit of Pulsicom output, which will take effect on January 1, 2027. Pulsicom manufacturers whose unit energy consumption exceeds 6.3 kilograms per kilogram must complete a corrective improvement by that date or face the risk of plant shutdown. Notably, this 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 Model in the Photovoltaic Industry Initiative to regulate market competition and advance standardized industry governance laid the foundation for price regulation enforcement. On July 31, the State Administration for Market Regulation issued Price Compliance Guidelines for the solar PDA sector, promoting a structural shift from price competition to value-driven differentiation. The SAMR emphasized that solar PDA companies must conduct price-compliant self-reviews and curb irrational low-price competition, and that the CCIA should strengthen industry self-regulation, promote the general principle, and guide companies away from illegal pricing practices such as low-cost companies. The SAMR also indicated that it will take enforcement action against non-compliant entities. Together with seven other Pulse of Compressors, we jointly signed an initiative to eliminate low-cost bills and fully comply with energy consumption standards on August 6. As a result of these collective measures, Pulse of Compressors are beginning to show signs of recovery. with spot prices stabilizing and lower prices rebounding by more than 10% from their recent lows. We're also diversifying beyond our core policy conditions to hedge against solar PVs to collect allergies, 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 sale of next-generation energy solutions and related equipment for AIVC. This includes energy storage systems, solid-state transformers, and solid-state distributors. These technologies support the industry's transition to high-voltage direct current architecture, such as the 800-volt CP standard advanced by NVIDIA and other leading AI infrastructure providers. The platform is anchored by Daco Group, our affiliated entity under common beneficial ownership with Daco New Energy, which brings over 40 years of power equipment manufacturing expertise, established technology and deep talent and customer relationships to accelerate our entry into the segment. We view AIDD 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 subsequent cycles, we intend to pursue this extension in a disciplined manner that preserves our balance sheet exchange. Despite a challenging environment, the solar field 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 in-type-hauled sitcoms, 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 advancement in high-efficiency in-type technology and cost optimization Thank you, Anita, and hello, everyone. This is Ming Yang, CFO of Daco New Energy. We appreciate you joining on our new conference call today.

I will now go over the company's second quarter of 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 activities starting in June following a prolonged period with no new policy developments. Growth 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. Growth 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 growth 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. The CNA 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's are recognizing $18.6 million in non-cash share-based compensation costs related to its sharing census 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 Next Generation Energy Solutions for AIDC 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 compared to $150.8 million in the first quarter of 2026 and $115 million in the second quarter of 2025. Operating work 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 Dockwood New Energy 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. Assisted net loss attributable to DoCo New Energy shareholders excluding non-cashier-based compensation costs was $81 million compared to $88.4 million in the first quarter of 2026 and $57.9 million in the second quarter of 2025. Assisted loss for basic ADS was $1.20 compared to $1.31 in the first quarter of 2026 and $0.86 in the same quarter of 2025. HIPAA dollar was negative $29 million compared to negative $83 million in the first quarter of 2026 and negative $48 million in the same quarter of 2025. HIPDA margin was negative 46.8% compared to negative 311% in the first quarter of 2026 and negative 64% in the same 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. And 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, no receivable balance was $71.7 million compared to $20.8 million as of March 31, 2026 and $49 million as of June 30, 2025. No receivable balance, which represent bank notes with maturity within six months. As of June 30th, 2026, health and maturity investment was $51 million compared to $50.3 million as of March 31st, 2026 and zero as of June 30th, 2025. And as of June 30th, 2026, the balance of fixed-term deposit within one year was $928.9 million compared to $1 billion as of March 31st, 2026 and $960.7 million as of June 30th, 2025. Now on the company's cash flows. For the six months ended June 30th, 2026, net cash using operating activities was $276 million compared to $105 million in the same period of 2025. And for six months ended June 30th, 2026, net cash using investing activities was $169.6 million compared to $342.7 million in the same period of 2025. Nick Cash's use in investing activities in 2026 was primarily related to the purchase of short-term investments and fixed-term deposits. For the six months ended June 30, 2026, Nick Cash's use in finance activities was $7.8 million compared to $32,000 in the same period of 2025. Nick Cash's use in finance activities in 2026 was primarily related to $7.8 million in stock purchases made by the company's subsidiaries. and Xinjiang.co from its minority shareholders. And that concludes our prepared remarks. We will now open the call to Q&A from the audience. 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 two. 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.

Hi, this is Oscar Chen for Phil. Can you hear me okay?

Yes, you're allowing clear.

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 remained 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.

We're going to translate your question and then This is August 6th.

This is August 6th, Guangfu Society, China's Guangfu Society, held a meeting. It is hoped that everyone will be together. The goal is not to sell at low cost. The cost value is now 50,000 to 700,000. Of course, this is a part of China. The demand for the current market is not too big. However, there is still a stock market in China. The stock market of 500,000 to 600,000 people is in stock. So now it is said that it is better than the cost of sales. I should say that everyone is not going to agree. I will translate for our CEO, Mr. Xi. Okay, on August 6,

led by the China's Photovoltaic Industry Association. There is a strong initiative for self-discipline, and 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 kilogram. 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 approximately inventory in the industry. So we think the 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 that the English 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 polycylic and pricing and 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.

I think the U.S. and the U.S. are all in an optimistic state. Our U.S. is now reporting a reasonable price, an unreasonable price. The buyer is still observing, still observing, also in the process of a win-win. But I personally think that anti-corruption, what kind of sales should be said to be unlawful, may also be a kind of cheap sales, should also be stopped. In this regard, we need to carry out anti-corruption work in a legal framework, in a legal framework, in a legal framework. But I think this should be effective, because in recent years, all of China's Guangfu enterprises, all of China's enterprises, are all pursuing a lot of progress. I think this kind of long-term promotion is not allowed. The business model is not allowed. So I think this concept will not last long. It should stay. In fact, last year, in December, when the first step was taken by the people of Shaanxi Province, our country's economy was not losing its economy. Last year was the best year. I think this movement So let me translate for Mr. Shi.

So right now the industry in terms of the value chain between the buyers and sellers of polysilicon. So some of the buyers are still observing the market and the policy and they're taking a wait-and-see approach. But in terms of the possible manufacturers or expecting a reasonable price where they would not be selling at a lot or below their cost. So there's still some You can call it a wait and see between the positive 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. And where the government is very adamant about preventing dumping, of the products and sellings below cost. So within the law framework for price law and for the anti-evolution, our expectation is that this is likely to move forward optimistically over the next several months. and then we know that over the past few years, the policy manufacturers or the whole industry in general have seen significant losses and we do not think that this is long-term sustainable. In fact, this is very unsustainable and this is likely to lead to the industry in trouble. So if we look at DQ, especially in December of last year when the anti-evolution policy was more successful, right? So DQ had no cash loss in Q4 of 2025. So we were able to achieve a positive operating cash flow during that period. So we think that that's a more sustainable and the timing of framework going forward.

Thank you for the color. This is . Just my second question is on the self-discipline agreement signed in August. You know, previous rounds of cell regulation kind of struggle 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?

Our next question comes from Alan Liu with Jefferies.

Please go ahead.

We're still answering. Hold on, hold on. Give us a minute.

All right, we have Philip Chen back on the podium. My apologies.

Yeah. Yeah. are trying to become a foundation, a form of acquisition of a company. This is a conflict with China's anti-contradictory relationship with the Ministry of Health and Welfare. It's a legal conflict. I should say that it's not too reasonable. It's reasonable. But this time, everyone is in the field of intelligent technology, right? Also, according to the current situation of various companies, for example, Daquan, we make a lot of cash flow, we do a lot of opening and closing, we are in this, the cost of our production and production, the advantage of our technology is very obvious, we can go down. Some companies, due to their own technical reasons, the energy is high, it will not make the energy quality not good, right? The cash flow is not enough, so this situation will slowly follow the market rules. So this time, it's not about the cost. It's not about the cost price. Everyone is talking about the cost price. If it's not about the cost price, I think there are all kinds of ways to do it. So it's hard to get it down. It's hard to get it down. Because this time, there are still some entrepreneurs who are under the pressure of this framework. Can you go further?

Okay, now let me translate for Mr. Xu. Okay, so we believe that the current round of anti-involution policy and with the price law enforcement is likely to sustain. We saw it in the previous round. was that there was this proposal for the industry consolidation platform to accelerate the exit capacity. But the State Administration for Market Regulation stepped in because they were very worried about anti-monopoly practices between the manufacturers. and the leading manufacturers. So 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 Regulations and this is bringing self-discipline and forward and also this is not for example and there's no coordination between the manufacturers on pricing or allocating allocation of sales volume for example right so this time is really based on each individual manufacturers their own cost production costs right and in terms of their manufacturing efficiencies and for them to are selling products based on their ability to produce products at a lower cost. We think that this time it's actually much more sustainable and is being supported by the government. We think that through these two efforts, one is by being one of the lowest cost producers within the industry as well as with the regulations on energy usage, we think that this time it will promote a more market-oriented approach to both capacity exits and to the selling of products at a reasonable price. And this is all under the current legal framework brought forward by the government.

Hello? That's all my questions. Thank you. Thank you, Yan.

Thank you.

Our next question comes from Alan Liu with Jefferies. Please go ahead.

Thanks, management, for taking my question. So my first question is a follow-up on the Thank you for 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 quality price, for example, you mentioned the price quote at about 40 RMB per kilogram. Given that their inventory at their wafer players and demand isn't that strong, when would you expect the first batch of transaction at a higher price to happen? Because in the past two weeks, all the data has halted. So we'd like to know when we expect the real transaction is coming out.

Okay. Let me translate for Mr. Xie.

Give us a minute. Today, they told me in the market that there is a small amount of sales.

There is a small amount of sales at about 40,000. Because there is still demand. Although the demand is relatively weak, there are still many companies. Our next company is a private company. A private company has no insurance. He bought it for a small amount of money. This is also more than 100 million. The information we understand is more than 400 million. So I think this, but more than 40,000 people have to be with us at that time Our limited cost of 50,000 yuan is still such a gap I think this is testing, testing But I think this is what we are talking about It's not about the limited cost It's not about the cost, it's about the transaction It's also a violation of the law, it's a violation of the law It's unreasonable, it's unreasonable So I think this is going to get better and faster I personally think that is the case. But now there has been some progress. From the beginning of last year to the end of last year, there has been almost no progress. Now there has been some early progress. I think this thing will... I think it will probably speed up. So what is the political situation? Everyone has to believe in us. As the saying goes, everyone has to believe in our promise, right? Because everyone has a promise. If we don't have a promise, we need to have a trade policy. To push some measures against the other side of the country, I think this may be faster and faster.

Okay, let me translate for Mr. Shi. Okay, I think he's seeing in the market that there is 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. but there are some wafer producers in the industry that have a very low to no inventory where they are procuring to production. And so right now, so we are seeing some transactions, though not very high. What we're seeing is some manufacturers are testing the market So 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 right now. And so 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.

Understood. So strictly based on the production cost, probably price would be higher than that. But given that in this round of the anti-evolution initiative, there is not an acquisition plan afterwards. So if prices goes up to 40 or maybe 45 or 50 RMB per kilogram, what do you think would happen? Because effectively, this will reach to the cost level of more players. So like who would be able to sell their products or what do you think the end game of this round of initiative? Or is there some capacities will be shut down because of the higher energy consumption requirement or like how do you see this?

Let me translate for Mr. Schaffer's, okay, just a minute. China has a problem with energy consumption.

Energy consumption in the first quarter, second quarter, and third quarter. Energy consumption in the third quarter and second quarter, right? I can't remember the details. Energy consumption is an important issue. Because now the energy consumption is too high. So if you don't produce energy, you will be forced to be eliminated. There is no electricity. This is the first one. The second one is that China is based on this. We have some energy consumption here. We have industry data. Everyone is talking about it. We have to detect it automatically. This is mainly based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. This is based on a promise. Because there was a problem with people and time when we started this project, right? After all these factors and elements, it's already too late. Although it claims that it can start, it's already too late. But the real estate industry can't make it to 3 million, 2 million. 2 million is very difficult. Because this is a waste of money.

Some people can't afford it.

Some companies have stopped. People have been disbanded. There is no one. Disbanded.

Let me translate for Mr. Shi. He thinks that the recent energy quota policy from the government where there's different energy usage requirements for the industry, he thinks this will lead to forced exit of a significant amount of capacity that have significant or higher or 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 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 significant number of people. So there is actually a lack of employees and also lack of training. So there's a lot of capacity that has been shut down and is unlikely to restart going forward. So even now, he thinks that, for example, the effective capacity within the industry, even though close to 3 million tons have been built, the effective capacity is already less than 2 million tons right now. It's likely to go lower as well.

My last question is about the AIBC initiative as a second growth driver of the company. I wonder if there's all the backlog or progress to share on this new business. Thank you.

Okay, let me translate it. Okay, hold on. If the AIDC is the case, it is a necessary step forward.

Because we have to consider the current status of Guangfu's multi-billion-dollar company. If there is a big growth, there will be a lot of difficulty. Because everyone is very clear. The demand of the market, and the scale of Guangfu's power generation can be predicted. There are still so many companies in China. So as a big company, we are doing electrical industry, this industry should be in China. We have a lot of space in the Chinese market, so we need to build a switch. And after the development of AI this year, we know that we can understand the market. Because we are an electrical company, we should talk about switch, electricity is the market. We are a public industry. So after a lot of research, we think we should do something related to AI, AI related to AI, AI related to AI, AI related to AI, AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI related to AI . . . . . . So I think AIB is an industry that we want to talk to us about in the electric society, including its power plant, right? Including its IT plant, including its power plant, we are very familiar with this. This is our AIB as a line of production. In other words, the line of production is clear to everyone. Our AIB is very, our FFC, FFCB, the old switch or the new switch, is a line of production. are all global and are looking for a future direction. Although there are not many markets in SLC next year, we are looking for a solution. We are looking for a solution that is more developed than the one in China and Alibaba. So we think that we should use the advantage of the capital in the New Energy Corp. In addition to this, it should be said that it is a huge growth trend, a growth trend. We are here to invest in this industry, to invest in the market, to invest in the market, to join the development of the market. This is our advantage, our advantage, and this industry is very familiar to us. What are we doing now? We have our own research team. We are a research team in Shanghai. So I think in 2026, 2027, we should be efficient, we should be efficient. Because everyone in this industry has a lot of customer support. We should say that our R&D team is on the first level. We also want to do it. In fact, the R&D team of the R&D department is joining our team. In the system of R&D, in the system of R&D, in the system of R&D, we can be the leader of this industry, even the leader of the whole industry. This is our advantage. We now have a limited number of employees. We can make a lot of money. We can make a lot of money. We can make a lot of money. We can make a lot of money. We can make a lot of money. 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's going to be a significant growth driver for the company and it's the second sector that the I think most investors are probably aware that we do think that the growth for the policy 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 Daco Group has more than 40 years of experience in the power equipment sector and being one of the leading manufacturer and supplier of high and low voltage, for example, power equipment such as a transformer and circuit breaker. So Daco Group is seeing a very strong demand, especially in AI data center related power equipment. So we do think this is a very significant and real opportunity for the company. And Daco Group brings many years of experience and advantage in manufacturing, in R&D, in technology capability. So in terms of products as well. So, you know, with the growing demand I power demand and especially for the next generation power infrastructure for IDC where in the led by NVIDIA there's this future development of a new next generation of equipment under the 800 volt DC infrastructure for so we're targeting initially in 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 100 volt DC technology. So with Daco Group, it brings significant experience and advantage, and at the same time matching with Daco New Energy's strong balance sheet and capital position to capture this growth driver. So 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 then achieving sales starting in 2027 and then capturing the growth opportunity in 2028 to 2030 and 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.

Thanks a lot for management. Thank you. Great, great.

Thank you, Alan.

Our next question comes from Mona Wang with Goldman Sachs. Please go ahead.

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 a 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 are self-disciplined in the first half. Like, we uphold our pricing, and then we record 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, like $50,000 per ton, or we are kind of wanting to reach the balance between price or shipment? So I want to hear more about the poly business operations strategy. Thank you.

Okay. Okay. Thank you, Moen. So let me translate your question for Mr. Shi and then he will respond. Okay.

Just a minute. What do you think about shipping?

I think, my concept is, in the second half of the year, for us, shipping should be, our product quality should be better. Shipping is not the main problem. The main problem is the price. What is the price problem? In the first half of the year, we shipped less. According to our industry, large-scale manufacturers should be able to produce more than 15% of the annual sales. It is reasonable to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. So we will continue to produce more than 15% of the annual sales. We will continue to produce more than 15% of the annual sales. and many other companies will be eliminated. Secondly, those who are not good at energy consumption will be forced to be eliminated by the government. This is a very good thing for us. So I think that the Chinese energy sector has such a good financial state and good quality standards. And the quality of the good quality is the advantage that we can overcome next year. I think our next step We want to make a big fire in China. We want to get rid of our stockpile. From the future, I don't dare to say it clearly this year. We will go back next year. This year, everyone is looking at the price increase. Of course, it's not just the problem of our stockpile, including our stockpile. It's not just the problem of the stockpile, including our stockpile. The price is also rising. Let me translate for Mr. Shih. So in the second half,

We believe is that because of the community, we have a superior quality of product in the market. So, you know, 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, so we did not sell as much products as our normal Thank you very much. Thank you. So our target is to sell at an appropriate price or a 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. are all manufacturers with poor cash positions or poor cash flow. So companies with not a good balance sheet is likely to struggle, continue to struggle going forward. While New Energy with our cash position and our strong balance sheet and also our high product quality and low cost, we expect that we're likely to do better. to do well in the market, 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.

Okay, thank you. So can I conclude that we will hold up the price in your turn, and we will wait until the rest of the marginal players to exit, and then we, at that time, we will see fast inventory depletion, and the recovery of the shipment is likely to occur in the next six to 18 months. Okay.

I think in terms of pricing, we cannot sell below cost. We're going to adhere to that. 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 exits.

Okay, that's super clear. And my second question about AIGC, I think we have put out announcements like we have 6 billion renminbi total investment, 2 billion in the first place. 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 ADC business, specifically like our CapEx timeline and the source of capital for this $6 billion or $2 billion investment. and what's our expected payback duration for the first phase of the production phase and what the normalized probability from this business do we expect we'll achieve and also for other like operating metrics where we have more other sources allocated for this new business development or we can use some of the synergies from our DICO group, the aligner company. So a lot of details about can you share a bit more regarding to these metrics. Thank you so much.

Okay, okay. Let me translate your question first quickly. Okay, hold on. This is the related information of the investment in RITC.

The main thing is that there are some of our long-term accounts, SSCD. What we can see next year is an account related to electricity. I think we will have sales next year. We should be able to sell very quickly. At the same time, this is an industry. can see our sales next year. I think this sales should be in line with the overall system of the university. This makes us strong. I think there is enough electricity to support our industry.

As for what we are doing now, our new investment can build our factories as soon as possible. As long as we can install our equipment as soon as possible,

The team of human resources is based on the original expertise of the mayor and Daxing Group. We will let them find new jobs. This is what I think we are doing. At the same time, we are starting to develop SST. SST should be said that the market this year and next year has not fully exploded yet. I think before the future explosion, we are fully prepared to welcome a new opportunity and opportunity this time.

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 all of South State Transformers, South State and also our e-house total solution for our infrastructure and also some related to energy storage and so the remaining four billion is not committed as of today so and it will be planned sometime in the future and then in terms of our strategy. So we're focusing on AIDC related power infrastructure equipment. And then we expect to have three primary products. So one is a total solution, or a package 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 on solid-state transformers and solid-state circuit breakers as well as include the related software and control. And there is very significant synergy with DACO Group where we, because of DACO Group's experience and know-how and also their position within the market, we think that it's actually we can receive significant orders from customers. and so we're now in the phase of doing R&D and also the building of related manufacturing facilities and 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 so in terms of 2026 and 2027 is really a preparation period and introduction of the product into the market and we think that the market will see a high growth phase from 2028 to 2030 and where we do expect a significant ramp up of revenue during this period for these related products and business. Okay, all right, thank you, Mengwen.

For the $2 billion committed investment, we will extend in 2026.

Over the next two years. This year is only about, I think, two years. It's only maybe $30 million to $40 million this year. And then the remaining will be over the next two years, actually. Sure.

That's all from me. Thank you.

Thank you. And then our CEO will make an additional comment.

This is a full-time position. The annual time is relatively long. But now, the demand for half-aged people in the market for the next year, as far as I know, is 7.6 million people worldwide. And 7.5 million to 6 million people. The market will only have 5.7 million people in the next year. So we still hope that we can get the half-aged people this project as soon as possible. As soon as possible, we can get the certification, get the certification. The half-aged industry will bring us more value. Of course, we need to find a group to do this.

Okay. And Mr. Xu will provide an update on our semiconductor policy and business, where the company has spent a total investment including land and related equipment facility to about 1.2 billion RMB into the business. And we've been doing product trial production and also in terms of qualification with our customers. The qualification cycle has been much longer than we anticipated, but we're continuing to do this. He's very optimistic that he's looking at very significant market demand. where the demand for semiconductor poly is roughly 75,000 tons per year, while right now the current industry production for semiconductor poly is only about 57,000 tons per year. So it's splitting a very significant growth for this product, this market sector. So we're going to wrap up and reinvigorate our activities. for this.

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

Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye.

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