Daqo New Energy subsidiary ordered to pay compensation in first instance retrial

Daqo New Energy’s (DQ) subsidiary Xinjiang Daqo has provided an update on a lawsuit. In April 2024, Xinjiang Daqo, a subsidiary of Daqo New Energy, received a court summons relating to a contract dispute lawsuit filed against it by Xinjiang Xian’an New Materials and its affiliate Xinjiang Dengbo New Energy. The plaintiffs previously provided silicon core processing services to Xinjiang Daqo and requested for termination of the business cooperation agreement with Xinjiang Daqo and for compensation from Xinjiang Daqo for their economic losses totaling RMB1,958.5M, later reduced to RMB742.7M, which consisted largely of alleged consequential damages of the plaintiffs. In July 2024, the company received the first instance court’s verdict, which affirmed termination of the business cooperation agreement and ordered Xinjiang Daqo to compensate the plaintiffs for their losses and attorney fees totaling RMB3.16M, while rejecting the plaintiffs’ claims for consequential damages. The plaintiffs appealed to the second instance court. In March 2025, the company received the second instance court’s verdict, which remanded the case for a retrial. Recently, the company received the verdict of the first instance court’s retrial, which affirmed termination of the business cooperation agreement and ordered Xinjiang Daqo to compensate the plaintiffs for their losses and attorney fees totaling RMB3.30M, while rejecting the plaintiffs’ claims for consequential damages. The litigation’s impact on Xinjiang Daqo will be contingent upon the final verdict.