China International Capital Corporation Limited

About Xinjiang Daqo New Energy Co., Ltd

2024 Semi-Annual Continuous Supervision Follow-up Report

In accordance with the Administrative Measures for the Sponsorship Business of Securities Issuance and Listing (hereinafter referred to as the "Sponsor Measures"), the Rules for the Listing of Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange (hereinafter referred to as the "Listing Rules"), the Self-Regulatory Guidelines for Listed Companies on the Science and Technology Innovation Board of the Shanghai Stock Exchange No. 1 - Standardized Operation, and other relevant laws and regulations, China International Capital Corporation Limited (hereinafter referred to as "CICC" or the "Sponsor Institution") acts as Xinjiang Daqo New Energy Co., Ltd. (hereinafter referred to as "Daqo Energy" orThe "Company") is responsible for the continuous supervision of Daqo Energy, and issues this semi-annual follow-up report for continuous supervision.

1. Continue to supervise the work

Serial No. Work Content Continuous supervision

The sponsor has been established and established

1. Establish and effectively implement the continuous supervision system, and effectively implement the continuous supervision system for specific situations

The continuous supervision of the work to develop the corresponding work plan, and the development of the corresponding work

Make a plan.

The sponsor has entered into a partnership with Daqo Energy

According to the relevant regulations of the China Securities Regulatory Commission, before the commencement of continuous supervision, a sponsorship agreement is signed

2. Sign a continuous supervision agreement with the listed company or relevant parties, making it clear that both parties are in continuous supervision

The rights and obligations of the party during the period of continuous supervision, and the rights and obligations of the Shanghai Stock Exchange during the period, and

Filed with the Shanghai Stock Exchange

Table.

The first half of 2024 is all-round

During the period of continuous supervision, the sources of violations of laws and regulations of listed companies in accordance with relevant regulations were not reported during the period of continuous supervision

3. If a public statement is made, it shall be reported to the Shanghai Stock Exchange before disclosure in accordance with the relevant regulations

and after being reviewed by the Shanghai Stock Exchange, it is illegal to make a public statement in the designated media

Violations.

During the period of continuous supervision, the listed company or relevant parties have violated the law in the first half of 2024

Regulations, breach of commitments and other matters shall not be issued during the period of continuous supervision from the date of discovery or should have been discovered

4. Report to the Shanghai Stock Exchange within five working days, and the content of the report includes violations of laws and regulations or breach of commitments

Including listed companies or relevant parties in violation of laws and regulations, breach of commitments, etc.

The specific circumstances of the matter, the supervisory measures taken by the sponsor, etc

Serial No. Work Content Continuous supervision

Sponsor agencies through the daily ditch

Through daily communication, regular return visits, on-site inspections, due diligence and other means, regular or irregular return visits

5. Carry out continuous supervision and other ways to understand Daqo Energy

business situation, for Daqo Energy

Ongoing supervision has been carried out.

In the first half of 2024, sponsored

The agency supervises Daqo Energy and its

Directors, supervisors, senior management

Supervise listed companies and their directors, supervisors, and senior managers to comply with laws and regulations.

6. Laws, regulations, departmental rules and business regulations issued by the Shanghai Stock Exchange and the Shanghai Stock Exchange

and other normative documents, and earnestly fulfill the commitments made by the business rules issued by the easy

Other normative documents, practically

Fulfilment of the commitments it has made

Promise.

Supervise listed companies to establish, improve and effectively implement corporate governance systems, including sponsor institutions to supervise Daqo Energy

7. The rules of procedure of the general meeting of shareholders, the board of directors and the board of supervisors shall be sound and sound in accordance with relevant regulations

The code of conduct for directors, supervisors and senior management personnel and other corporate governance systems are strict

Implement the corporate governance system.

Sponsor of Daqo Energy

Supervise listed companies to establish, improve and effectively implement internal control systems, including the design and implementation of internal control systems

Not limited to the financial management system, accounting system and internal audit system and the effectiveness of the verification were carried out,

8 degrees, as well as the use of raised funds, related party transactions, external guarantees, and external Daqo Energy's internal control system

Investment, derivatives trading, control of subsidiaries and other major business decisions in accordance with the requirements of relevant laws and regulations

The procedures and rules are effectively implemented and can be ensured

The company's standardized operation.

Supervise listed companies to establish, improve and effectively implement the information disclosure system, and review and sponsor institutions to supervise Daqo Energy

Read the information disclosure documents and other relevant documents, and have sufficient reasons to believe that they are sound and complete in accordance with relevant regulations

9. There is no false information disclosure system in the documents submitted by listed companies to the Shanghai Stock Exchange, and the information disclosure system is strict

Records, misleading statements or material omissions are executed, and information disclosures are reviewed

and other relevant documents.

Information disclosure documents for listed companies and to the China Securities Regulatory Commission and Shanghai Securities Regulatory Commission

Other documents submitted by the securities exchange will be reviewed in advance to identify any problems

The information disclosure documents timely urge the company to be corrected or supplemented, and the company's sponsor agency to Daqo Energy

If it is not corrected or supplemented, it shall be reported to the Shanghai Stock Exchange in a timely manner; The information disclosure documents were reviewed

10. If the information disclosure documents of the listed company have not been reviewed in advance, they should be read, and if they do not exist, they should be updated in a timely manner

Within five trading days after the listed company fulfills its information disclosure obligations, it shall complete the report to the Shanghai Stock Exchange

Review of relevant documents and respond to problematic information disclosure documents.

Promptly urge the listed company to correct or supplement, and the listed company will not correct or

If it is supplemented, it shall be reported to the Shanghai Stock Exchange in a timely manner

Serial No. Work Content Continuous supervision

Pay attention to the listed company or its controlling shareholders, actual controllers, directors, and supervisors in the first half of 2024

matters, senior management by the China Securities Regulatory Commission administrative penalties, Shanghai securities period, Daqo Energy and

11. The securities exchange is disciplined or issued by the Shanghai Stock Exchange to supervise its controlling shareholder and actual control

and urge it to improve the internal control system and take measures against the personnel, directors, supervisors, and senior officers

Corrected No such thing happened to the manager

Item.

Continued supervision in the first half of 2024

Continue to pay attention to the listed company, its controlling shareholder, actual controller, etc

12 In the case of the promise, the listed company and its controlling shareholders and actual controllers have not exercised their controlling shareholders and actual control

If the undertaking is carried out, the person shall report to the Shanghai Stock Exchange in a timely manner that there is no failure to fulfill the commitment

Circumstance.

Pay attention to the reports of listed companies in the public media, and continue to supervise the market in the first half of 2024

Smell for verification. After verification, it is found that the listed company has not been disclosed during the disclosure period, and the sponsor institution

13. If the major matters disclosed or the information disclosed are inconsistent with the facts, they shall be supervised and verified in a timely manner, and if they do not exist, they shall be reported in a timely manner

Urging listed companies to truthfully disclose or clarify; Listed companies do not disclose the report of the Shanghai Stock Exchange

or clarification, the situation shall be reported to the Shanghai Stock Exchange in a timely manner.

If any of the following circumstances is discovered, the listed company shall be urged to make an explanation and set a deadline

Corrections, and at the same time report to the Shanghai Stock Exchange: (1) Suspected violations

the Listing Rules and other relevant business rules; (2) Securities service institutions will continue to supervise in the first half of 2024

14 and the professional opinions issued by its signatories may have false records and misunderstandings during the period

Violations of laws and regulations such as introductory statements or material omissions or other improper circumstances The foregoing circumstances occur.

Shape; (3) The company has any of the circumstances specified in Article 70 of the Sponsorship Measures

Shape; (4) The company does not cooperate with continuous supervision; (5) Shanghai Securities

Other circumstances that the exchange or sponsor deems necessary to report

The sponsor has developed a comprehensive set of pairs

15. Formulate an on-site inspection work plan for listed companies, and clarify the on-site inspection work plan for on-site inspection energy

Work requirements, ensure the quality of on-site inspection work, and clarify the on-site inspection

Job Requirements:

In the event of any of the following circumstances in a listed company, the sponsor institution and sponsor representative

The person shall conduct the special examination within 15 days from the date on which he or she knew or should have known

on-site verification: (1) there is a suspicion of major financial fraud; (2) Control Continuous supervision in the first half of 2024

16 shareholders, actual controllers, directors, supervisors or senior management During the leadership period, Daqo Energy did not

suspected of misappropriating the interests of a listed company; (3) There may be major violations of the foregoing circumstances.

Protect; (4) There are major abnormalities in capital transactions or cash flows; (5)

The Shanghai Stock Exchange or the sponsor institution believes that on-site verification should be conducted

Check other matters.

2. Problems found by the sponsor and the sponsor representative and their rectification

Not.

3. Major risk matters

The main risk factors that the Company is currently facing are as follows:

(1) The risk of a significant decline in performance or loss

From January to June 2024, the company's operating income and net loss attributable to shareholders of the parent company were 458,378.56 million, respectively

Yuanhe was 670.1621 million yuan, and its operating performance decreased significantly from the same period last year. Starting in 2023, with the continuous release of new capacity in the industry, the overall production capacity of the industry has risen, the relationship between polysilicon supply and demand tends to be unbalanced, and polysilicon prices have been declining. If the production capacity in the industry continues to increase in the short term or the procurement strategy of downstream enterprises adjusts, resulting in intensified competition in the industry or shrinking downstream demand, there may be a risk of further decline in polysilicon product prices, and the company's performance will continue to decline or lose money.

(2) Core competitiveness risks

The photovoltaic industry in which the company is located has the characteristics of rapid technology update and rapid cost reduction, which objectively requires the company to pay attention to the industry and technology development trends in advance. Polysilicon is the main raw material of crystalline silicon photovoltaic cells, and the downstream technological progress of crystalline silicon photovoltaic cells may lead to higher and higher requirements for the quality of polysilicon products in the downstream. In order to maintain the advanced nature of technology, the company must continue to invest a lot of R&D funds in technology research and development, process development and improvement, and new product development. If the company fails to lay out forward-looking technologies and cannot maintain continuous investment in scientific research and technological innovation capabilities, there may be a risk of technological backwardness, which will lead to the weakening of the company's market competitiveness and even the risk of elimination.

(3) Operational risks

1. The risk of high concentration of customers and suppliers

(1) The risk of high customer concentration

The company's downstream wafer industry is highly concentrated, and from January to June 2024, the sales proportion of the company's largest customer is:

27.39%, and the top five customers accounted for 80.69% of sales, with a high customer concentration.

If there is an adverse change in the cooperative relationship between the company and major customers, or there is an adverse change in the operation and financial condition of major customers, or the competition in the industry will intensify in the future, the company fails to cultivate new customers in a timely manner, which will have an adverse impact on the company's future production, operation and financial condition.

(2) The risk of high supplier concentration

The company's production capacity is located in Xinjiang and Inner Mongolia, and it purchases raw materials such as industrial silicon powder and energy sources such as electricity and steam nearby, resulting in a high concentration of suppliers. Industrial silicon powder and energy procurement accounted for a large proportion of the total procurement of raw materials. If the company's main suppliers are unable to meet the company's procurement needs, or the company's cooperation with them changes, it may have an adverse impact on the company's operation in the short term, and the company may be forced to purchase raw materials from foreign suppliers, resulting in an increase in purchase prices or transportation costs, affecting the company's profitability.

2. The risk of declining gross profit margin

The direct materials required for the company's production are mainly industrial silicon fumes. The price of industrial silicon powder directly affects the unit cost of the company's products, and the upward fluctuation of the price of industrial silicon powder will lead to the increase of the company's cost, which in turn will have a large negative impact on the gross profit margin of the company's products; The sharp fluctuation of industrial silicon powder prices will also bring difficulties to the company's raw material procurement management and inventory management, and have a negative impact on the company's normal operation.

The proportion of electricity cost in the company's production cost is relatively high, and the fluctuation of electricity price has a great impact on the gross profit margin level of the company's related products. Although the Company has signed an agreement with its power supplier to guarantee the supply of electricity and agreed on the price of electricity for a longer period of time, due to the fluctuation of coal prices, there is a risk that the Company's electricity price will fluctuate upward, which in turn will adversely affect the Company's profitability. At the same time, if the government takes measures such as energy consumption and electricity consumption control in the process of economic regulation and control, there is a risk of shortage of energy supply for the company, which will adversely affect the company's normal operation. With the fluctuation of polysilicon market prices, the gross profit margin of the company's products fluctuates greatly, and if the supply and demand relationship in the industry changes unfavorably in the future, the market price of polysilicon will decline, and the gross profit margin of the main business will decline. At the same time, if the prices of major raw materials (industrial silicon powder) and energy (electricity) fluctuate upward, it will also have a negative impact on the gross profit margin of the company's main business.

3. Risks of safe production

The raw materials required for the company's production include some flammable, toxic and corrosive materials, which are dangerous and have high requirements for the operator's technology, operation process and safety management measures. In the future, if the company's production equipment fails, or the use of hazardous materials and equipment is improper, it may lead to fire, explosion, dangerous goods leakage and other accidents, the company will face the risk of property loss, production line shutdown, and even casualties, and may be subject to administrative penalties by relevant departments, which will adversely affect the company's production and operation.

(4) Impairment risk of fixed assets and construction in progress caused by changes in technical routes

As of June 30, 2024, the book value of the company's fixed assets was 1,752,065.18 million yuan, and it was under construction

Cheng was 956,465.10 million yuan, accounting for 92.95% of non-current assets. The above-mentioned fixed assets are subject to the risk of asset impairment due to damage, technological upgrades and major changes in the downstream market.

The polysilicon production process currently adopted by the company is a more advanced modified Siemens method, and if there is a major change in the technical route of the photovoltaic industry or the technical route of polysilicon production, and other more advanced production processes appear, it will also lead to the risk of impairment of the company's fixed assets and projects under construction.

(5) Industry risks

The company's high-purity polysilicon products are mainly used in the photovoltaic industry. The photovoltaic industry is a strategic emerging industry, benefiting from the promotion of national industrial policies, and the photovoltaic industry has experienced rapid development in the past ten years. At this stage, some areas of China have achieved or are approaching grid parity. With the gradual maturity of the photovoltaic industry's technology, the rapid expansion of the industry scale and the continuous decline in costs, the state has introduced a series of relevant measures to promote the healthy development of the photovoltaic industry, but the implementation and long-term effect of policy guidelines on the market side cannot be determined for the time being, so the impact on the company's operation and profitability needs to be further judged. In the future, if there is a major change in the PV industry policy, it may have an adverse impact on the company's operating conditions and profitability.

(6) Tax policy risks

According to the relevant provisions of the Administrative Measures for the Identification of High-tech Enterprises (Guo Ke Fa Huo [2016] No. 32) and the Guidelines for the Management of the Identification of High-tech Enterprises, the company is recognized as a high-tech enterprise and can enjoy a corporate income tax rate of 15%. At the same time, according to Cai Shui [2011] No. 58 "Notice on Tax Policy Issues Concerning the In-depth Implementation of the Strategy for the Development of the Western Region" and Announcement No. 12 of the State Administration of Taxation [2012] "Announcement on Issues Concerning Enterprise Income Tax Issues Concerning the In-depth Implementation of the Strategy for the Development of the Western Region", Daqo Energy's main business falls within the scope of the "Catalogue of Encouraged Industries in the Western Region", so the company pays enterprise income tax at a rate of 15%. If the company fails to continuously obtain the qualification of high-tech enterprises in the future, and Daqo Energy's main business no longer falls within the scope of the "Catalogue of Encouraged Industries in the Western Region", or there are major changes in the relevant preferential tax policies of the state, the amount of income tax to be paid by the company will increase significantly, so that the operating performance will be adversely affected.

(7) Other major risks

1. Risks related to the listing of the company and its controlling shareholder, Cayman Daqo, on the Science and Technology Innovation Board and the New York Stock Exchange respectively

The company was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on July 22, 2021, and the controlling shareholder of the company opened

Manchester Daqo was listed on the New York Stock Exchange in the United States in October 2010 and the Company and Cayman Daqo are required to comply with the laws and regulations of both places and the listing regulatory requirements of the securities regulatory authorities. There are differences in laws, regulations and securities regulatory concepts between China and the United States, and there are certain differences between the Company and Cayman Daqo in terms of specific accounting treatment, financial information disclosure and the scope of information disclosure due to the application of different accounting standards and different regulatory requirements. In addition, the maturity of the capital markets and securities trading rules in China and the United States are different, and the composition and investment philosophy of investors are different, and if the stock price of the controlling shareholder Cayman Daquan fluctuates in the New York Stock Exchange in the United States, it may also cause the company's stock price to fluctuate.

2. The risk of the implementation of the project with an annual output of 1,000 tons of high-purity semiconductor materials

The company's main business is the research and development, production and sales of high-purity polysilicon, which are mainly used in the photovoltaic industry. One of the company's IPO fund-raising investment projects, the "1,000 tons per year high-purity semiconductor materials project", added 1,000 tons of semiconductor-grade polysilicon production capacity per year. The purity of semiconductor-grade polysilicon is higher than that of the company's current products, the production technology is difficult, and the application fields and target customers are different from the company's existing products. The company has not been engaged in the production of semiconductor-grade polysilicon, and if the fund-raising project cannot be implemented or postponed due to lack of production or technical experience, or the product quality and production capacity release do not meet expectations, or the customer development does not meet expectations, it may affect the expected income of the fund-raising investment project.

3. The company was included in the Entity List by the Bureau of Industry and Security of the United States Department of Commerce

June 23, 2021, Bureau of Industry and Security, United States Department of Commerce

The company was added to the Entity List on the grounds of alleged "alleged human rights abuses and participation in repression, mass arbitrary detention, forced labor, and surveillance of members of Uyghur, Kazakh, and other Muslim minorities in the Xinjiang Uyghur Autonomous Region."

The company signs a unified employment contract with the hired ethnic minority employees, applies a unified standard human resource management system and salary system to the Han employees hired by the company, meets the requirements of the Labor Law of the People's Republic of China and relevant laws and regulations, and there is no "forced labor".

Since the establishment of the company, it has never carried out any production and operation business in the United States; Used in the production and operation of the company

The polysilicon production-related technologies are formed by the company's introduction and absorption and independent innovation, the raw materials required for production do not have items subject to the "United States Export Control Regulations", the software and equipment required for production and operation can basically be replaced, and being included in the entity list will not have a material adverse impact on the company's normal production and operation.

However, it cannot be ruled out that due to the escalation of geopolitical contradictions, the company and other domestic photovoltaic enterprises will be further restricted or sanctioned by United States and other countries, regions or foreign institutions, which will make the domestic photovoltaic industry face the risk of aggravated trade frictions and adversely affect the company's production and operation. Investors are reminded to pay special attention to the associated risks.

4. Major violations

During the continuous supervision period in the first half of 2024, Daqo Energy did not have any major violations.

5. Reasons and reasonableness of changes in major financial indicators

In the first half of 2024, Daqo Energy's main financial data and indicators are as follows:

Unit: 10,000 yuan

Key Accounting Data January-June 2024/Current Period January-June 2023/Previous Year The current period increased from the same period last year

Period-end Period-end Decrease (%)

Operating income 458,378.56 932,471.49 -50.84

Net profit attributable to shareholders of listed companies -67,016.21 442,612.21 -115.14

Deductions attributable to shareholders of listed companies were not -69,358.73 442,511.83 -115.67

Net profit from recurring gains or losses

Net cash flow from operating activities -346,531.43 540,841.68 -164.07

End of the reporting period End of the previous year The end of the reporting period compared with the previous year

Degree end increase or decrease (%)

Net assets attributable to shareholders of listed companies 4,235,638.83 4,387,924.51 -3.47

Total assets 4,783,039.29 5,069,505.45 -5.65

In the first half of 2024, the company's main financial indicators are as follows:

Key Financial Indicators January-June 2024 January-June 2023 The current period increased or decreased from the same period last year

(%)

Basic earnings per share (RMB/share) -0.31 2.07 -114.98

Diluted earnings per share (RMB/share) -0.31 2.07 -114.98

Basic earnings per share after deducting non-recurring gains and losses were -0.32 2.07 -115.46

Profit (RMB/share)

Weighted average return on equity (%) -1.54 9.81 decreased by 11.35 percentage points

The weighted average net after deducting non-recurring gains and losses was -1.60 9.81, a decrease of 11.41 percentage points

Return on Assets (%)

Key Financial Indicators January-June 2024 January-June 2023 The current period increased or decreased from the same period last year

(%)

Ratio of R&D investment to operating income (%) 6.76 3.33 An increase of 3.43 percentage points

In the first half of 2024, the company achieved operating income of 4583.7856 million yuan, a decrease of 50.84% from the same period of the previous year.

Net profit attributable to shareholders of the listed company, net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses, net cash flow from operating activities, basic earnings per share, diluted earnings per share, and basic earnings per share after deducting non-recurring gains and losses decreased by 115.14%, 115.67%, 164.07%, 114.98%, 114.98% and 115.46% respectively over the same period last year, mainly due to the imbalance between supply and demand in the polysilicon market during the reporting period. This is due to a sharp drop in polysilicon prices. The weighted average return on equity and the weighted average return on equity after deducting non-recurring gains and losses decreased by 11.35 and 11.41 percentage points, respectively, from the same period last year, mainly due to the decline in net profit due to the decline in polysilicon prices.

Sixth, the changes in core competitiveness

(1) Advantages in technology research and development

While strengthening the strength of independent research and development, the company attaches great importance to cooperation with technical consulting institutions, universities and scientific research institutes, and actively uses the strength of external research and development institutions to strive to improve the overall research and development technology level of the company, forming an integrated research and development operation mode of production, learning and research. The company has established cooperative relations with the Chinese Academy of Sciences, East China University of Science and Technology, and Shihezi University to develop advanced process control technology for reduction and distillation, which has played a key role in improving the N-type density ratio, increasing the output of a single furnace, reducing the power consumption of the reduction furnace, improving product quality and reducing the energy consumption of distillation. At the same time, through continuous training of internal R&D personnel, promote relevant technical exchanges, and promote R&D personnel to understand relevant advanced technology at home and abroad, so as to enhance the scientific vision and R&D ability of R&D personnel.

In the semiconductor polysilicon process, through the introduction and independent research and development, the main process flow is comprehensively optimized, including the research and development of advanced technologies such as high-efficiency impurity removal technology, high-efficiency coupling distillation technology, high-efficiency distillation tower internals research and development, chlorosilane cryogenic adsorption technology, quality pre-evaluation system, heat/cold source stable utilization technology, automatic rod removal technology, CVD reactor automatic cleaning technology, silicon rod automatic transfer process, silicon rod cleaning and crushing technology, silicon material automatic sorting technology, silicon block cleaning technology, etc. The goal of safe and stable long-term production of semiconductor-grade polysilicon by semiconductor equipment has been achieved.

(2) Cost advantage

By continuously increasing R&D investment, establishing an efficiency management system and incentive mechanism, the company encourages all employees to participate in the efficiency improvement plan, and continuously improves the polysilicon production process technology, including cold hydrogenation fluidized bed process optimization

The original furnace intelligent control, chlorosilane high-efficiency purification technology, high-purity polysilicon quality improvement technology, round silicon core preparation technology, silicon powder recycling technology, low-level waste heat utilization technology, waste salt comprehensive utilization technology, etc., have initially achieved zero steam purchase, zero discharge of production wastewater, zero discharge of silica powder waste salt, and the production cost has repeatedly reached a new low, reaching the advanced level of the industry.

Digital technology is becoming a new engine for business development. The company has launched a comprehensive digital transformation project, and in the first half of 2024, it has successfully realized the full online process nodes and data, built a digital management system of "full process, all elements, and full closed loop", and won the "XPCC Manufacturing Digital Transformation Benchmark Enterprise". The process data management platform has realized the integration of technology, process, production and quality data, so as to more accurately guide and standardize the on-site operation of employees, which not only improves the fineness of management, improves production efficiency, but also effectively reduces production costs.

(3) Quality advantages

The company has always pursued excellent product quality, and the product quality has remained stable for a long time, which has been highly recognized by downstream customers. During the reporting period, through big data and modeling tools, a key quality control model was built, and the adaptive adjustment of key production links was realized, and continuous independent learning and optimization were realized, so as to further improve product quality, and the main indicators of polysilicon products reached the standard of electronic premium products. Through continuous R&D and technological innovation, the proportion of N-type density in polysilicon products can reach more than 80%, and the appearance is good, and the proportion of coral cauliflower material is low.

In order to better control the quality of the entire production process, the company has designed our company's semiconductor quality monitoring system through the skillful use of quality management tools, conducted a comprehensive analysis of the production process, combined with the advanced quality control concept of foreign semiconductor-grade polysilicon production enterprises, and established a scientific, rigorous and efficient quality management system to ensure that the quality of the products provided meets the potential needs of customers, highlighting the characteristics of comprehensive, full-staff, preventive, service-oriented and scientific quality management. From the distillation unit, reduction device to the exhaust gas recovery device, the unique monitoring means are designed for the characteristics of each key quality control point, and the company's polysilicon equipment and semiconductor equipment have reached the leading level in the domestic industry.

(4) Advantages of the management team

The company has built a total of 10 sets of polysilicon plants, and gradually cultivated its own production and operation management team, the core technical management team has up to 17 years of polysilicon production and operation management experience, which has played a key role in the company's continuous technology iteration, and provides reliable technical support in terms of safety production, product quality and production cost.

The company's management team has been deeply involved in the industry for many years, and has experienced the embryonic period of the domestic and even global photovoltaic industry.

The explosive growth period, overcapacity and shrinking demand have brought a large amount of production capacity to the trough period, and have a deep understanding of the industry, customer needs and other aspects, and accurately grasp the direction of industry development. Under various severe market tests, the company's management team has always aimed at the technical trends of the polysilicon industry, discovered and introduced advanced technologies in a timely manner, strengthened independent research and development, continuously improved its technical strength, and actively responded to various market changes.

7. Changes in R&D expenditure and R&D progress

(1) R&D expenditure and changes

Unit: 10,000 yuan

Number of the current period Number of the same period of the previous year Change (%)

Expensed R&D investment 31,007.72 31,017.42 -0.03

Capitalized R&D investment - - -

Total R&D investment 31,007.72 31,017.42 -0.03

The ratio of total R&D investment to operating income was 6.76 3.33, an increase of 3.43 percentage points

（%）

Capitalization of R&D investment - Proportion (%) - -

Note: The difference between the above R&D investment and the R&D expenses in the financial statements is mainly the cost of trial products in the R&D process. Before the results of R&D activities are mass-produced, various costs need to be invested, such as raw and auxiliary materials, fuel power, and the remuneration of R&D personnel. The trial products produced during this period are included in the cost because they can eventually be sold.

(2) R&D progress

Relying on years of core technology accumulation in the field of high-purity polysilicon preparation, the company has comprehensively deepened the R&D and innovation system, and carried out systematic and in-depth R&D exploration and practice in key links such as cold hydrogenation, distillation and purification, reduction and tail gas treatment, product finishing, and recycling. The successful implementation of these R&D projects has played a vital role in improving quality and increment, reducing costs and increasing efficiency, and recycling and low-carbon. At the same time, in the construction and operation of semiconductor-grade polysilicon production lines, the company has actively integrated and independently developed a number of advanced technologies and concepts, successfully achieved domestic zero breakthroughs in many technical fields, and the overall technical strength has jumped to the domestic advanced sequence.

Specifically, the company has promoted the research and development of a number of core technologies for polysilicon plants, including but not limited to cold hydrogenation fluidized bed process optimization, reduction furnace intelligent control system upgrade, chlorosilane high-efficiency purification technology research and development, high-purity polysilicon quality improvement, circular silicon core preparation technology innovation, silicon powder recycling technology exploration, low-level waste heat utilization technology development, waste salt comprehensive utilization technology breakthrough, and comprehensive digital transformation research and development. The advanced nature of these projects is mainly reflected in:

1. The product quality has been significantly improved, especially the proportion of N-type dense material has increased significantly, and the main quality of polysilicon

The indicators have reached or even exceeded the standard of electronic special products, and the appearance of the product has been significantly improved, which has greatly enhanced the market of the product

field competitiveness.

2. The dual improvement of production efficiency and energy utilization efficiency is achieved through the introduction of process digital tools and big data

Combined with digital twin technology, the precise optimization of the production process and the dynamic adjustment of parameters have been realized, which can effectively reduce them

The reduction power consumption, comprehensive power consumption and steam consumption are improved, and the output of a single furnace of the reduction furnace is increased, and the production is significantly reduced

Cost.

In addition, the company has successfully introduced and independently developed a 1,000-ton semiconductor-grade polysilicon production line in the construction of a 1,000-ton semiconductor-grade polysilicon production line

Complex adsorption of trace impurities, ultra-low temperature cryogenic purification, nitrogen purification, high-purity reduction furnace, ultra-high purity chemical cleaning

and cutting-edge technologies such as chemical cleaning of polysilicon, which ensure that the production line is fully capable of stable production of semiconductor-grade polysilicon

Capability marks that the company's technical strength in the field of semiconductor materials has reached a new level.

8. Whether the progress of the new business is consistent with the previous information disclosure (if any)

Not applicable.

9. The use of the raised funds and whether they are compliant

(1) The use of the raised funds

As of June 30, 2024, the use and balance of the company's raised funds are as follows:

Unit: 10,000 yuan

change

As of the end of the report

Prospectus or wherein: closing the end of the closing period of the current year

Deduction of issuance Description of fundraising as of report to report fundraising over-fundraising investment route

Raising funds Raising funds Raising funds Raising funds after the fundraising expenses Raising funds at the end of the period Cumulative funds at the end of the period Proportion of the amount of the current year

Source of Funds Funds in Place Total Net Funds Raised Total Commitments (3) Invested Funds Raised Funds Invested in Invested Funds (%) Fundraising

Time Amount (1) Total Investment = (1) - (2) Total Funds Cumulative Investment (%) Degree (%) Amount (8) (9) Set

(2) (4) Total Amount (6) = (7) = Capital

(5) = (8)/(1) gold

(4)/(1) (5)/(3) Total

forehead

First public in 2021

Development line July 19 644,700.00 606,719.18 500,000.00 106,719.18 595,508.58 93,975.33 98.15 88.06 4,386.87 0.72 -

Stock Day

Note: 1. The "total cumulative investment of over-raised funds as of the end of the reporting period" of the funds raised by the initial public offering includes the over-raised funds of RMB 492.8502 million that have been used to permanently replenish liquidity.

2. The funds raised by the company's issuance of shares to specific targets in 2022 have been fully used by the end of 2023.

(2) The deposit of raised funds

In order to regulate the management and use of the company's raised funds and protect the rights and interests of investors, in accordance with the provisions of relevant laws, regulations and normative documents such as the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Rules for the Listing of Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange, the Regulatory Guidelines for Listed Companies No. 2 - Regulatory Requirements for the Management and Use of Funds Raised by Listed Companies, and the Self-Regulatory Guidelines for Listed Companies on the Science and Technology Innovation Board of the Shanghai Stock Exchange No. 1 - Standardized Operation, combined with the actual situation of the company, The special account storage system is implemented for the raised funds, and the deposit, use, project implementation and management, and the supervision of the change and use of investment projects are stipulated. After the above-mentioned raised funds arrived, the company has carried out special account storage of raised funds, and the company and its wholly-owned subsidiary Inner Mongolia Daqo New Energy Co., Ltd., the sponsor institution and the bank that opened the raised funds signed the "Tripartite Supervision Agreement on the Storage of Special Account for Raised Funds", which clarified the rights and obligations of all parties. There is no material difference between the above agreement and the Tripartite Supervision Agreement on the Storage of Raised Funds in Special Accounts (Template) of the Shanghai Stock Exchange, and the Company has strictly complied with the use of the raised funds.

As of June 30, 2024, the storage of the special account for raised funds is as follows:

Unit: 10,000 yuan

Account Name, Bank, Bank Account, Balance of Funds Raised

Bank of China Limited Yangzhong Branch 502776395337 -

Xinjiang University (Note 1)

Bank of China Limited Shihezi 107087994445 -

New Energy Stock City North 2nd Road Sub-branch (Note 2)

China Everbright Bank Co., Ltd

Srumqi Branch (Note 3) 50820188000305583 -

Chongqing Rural Commercial Bank Wanzhou Branch 2901010120010025147 14,238.22

Inner Mongolia and Baotou City of Bank of China Co., Ltd

New Energy Donghe Sub-branch (Note 4) 155674571811 -

Ltd

Total 14,238.22

Note 1: This account is used for the company's liquidity replenishment project, and the funds raised in this special account have been used up and closed in 2022;

Note 2: The account is used to deposit over-raised funds, and the account balance has been fully transferred out to permanently replenish liquidity and increase the investment amount of fund-raising projects, and the account has been closed in 2023;

Note 3: This account is used for the Company's annual production of 1,000 tons of high-purity semiconductor materials, and the balance of this account has been fully transferred to 2022

Bank of China Co., Ltd. Baotou Donghe Sub-branch 155674571811 accounts, and the transferred amount will continue to be used for the investment project of the raised funds, and the original special account has been closed in 2022.

It has been used up and closed.

10. Shareholding, pledge, freezing and reduction of shareholdings, pledges, freezes and holdings of controlling shareholders, actual controllers, directors, supervisors and senior managers

As of June 30, 2024, the controlling shareholder, actual controller, director, supervisor and senior management of the Company

There is no pledge, freezing or reduction of the company's A-shares directly held by the personnel.

11. Other matters on which the Shanghai Stock Exchange or the sponsor institution deems it necessary to express its opinions

Not.