Good day, and welcome to the DeKo New Energy 3rd Quarter 2026 Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. 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, IR 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 third quarter of 2026, which can be found on our website at www.darko.com. Today attending the conference call, we have our Deputy CEO, Ms. Anita Xu, our CFO, Mr. Ming Yang, and myself. Our Chairman and CEO, Mr. Xiang Xu, is on a business trip now, so Ms. Anita Xu will deliver our management remarks on behalf of Mr. Xiang Xu. Today's call will begin with an update from Mr. Xu on market conditions and company operations, and then Mr. Yang will will discuss the company's financial performance for the quarter. After that, we will open the floor to Q&A from the audience. Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-working 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 follow-looking statements. Further information regarding these and other risks is included in the reports or documents we are 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 access such information except as required under applicable law. Also during the call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Now, I will turn the call to our Deputy CEO, Ms. Anita Xu. Ms. Xu, please go ahead.

Thank you. Hello, everyone. This is Anita, and I'll now deliver our management report marks on behalf of our CEO, Mr. Xu. Supported by continued energy evolution policies, including price enforcement, The polysilicon sector bottomed out and rebounded in Q3, with polysorptional prices gradually recovering toward cost levels. However, downstream players continued to hold polysilicon inventories and largely limited their purchases to immediate operational needs, keeping overall sector trading volumes low. Against this backdrop, we delivered a substantial increase in Q3 shipment volumes, driving strong sequential revenue growth and narrowing losses. Our financial position remains sound, with a robust balance sheet and zero debt throughout the period. As of September 30th, 2026, we held cash, cash equivalents and restricted cash of $546.5 million. Short-term investments of $267.3 million. Banked notes receivable of $161.5 million. held to maturity investment of $61.6 million and a fixed-term bank deposit balance of $1 billion. Together, these readily convertible assets total $2.06 billion USD up to $1.92 billion at the end of Q2, providing a strong financial foundation and strategic flexibility to navigate the current market environment. Operationally, our nameplate capacity utilization rate was approximately 70% during the period. Total production volume at our two post-sum facilities was 53,469 metric tons, exceeding our guidance range of 50,000 to 55,000 metric tons. Sales volume rose sharply from 15,190 metric tons in Q2 to 46,910 metric tons in Q3. following our shift in June from a wait-and-see stance to a more market-oriented sales and pricing strategy. We believe this increase also reflects greater customer confidence in our product quality and continued preference for our products. Our average selling price increased by 2% sequentially to $4.12 per kg, although the increase lagged the broader market recovery because Q3 shipments fulfilled orders signed before late July. On the cost side, average total production cost and average cash cost fell by 9.7% and 7.4% sequentially, respectively, reaching new record lows of US$5.37 per kg and US$4.23 per kg, respectively, reflecting our continued improvement in manufacturing efficiency and cost control. In light of the current market dynamics, We expect total post-sum production volume in Q4 of 2026 to be approximately 35,000 metric tons to 45,000 metric tons. For the full year of 2026, we expect production volume to be in the range of 175,000 metric tons to 185,000 metric tons. Anti-involution efforts across the solar PV sector continue during Q3. The State Administration for Market Regulation released price compliance guidance targeting the solar PV sector on July 31st, following August by an industry initiative against low-cost sales that we co-signed. Against this backdrop, health sitcom manufacturers halted the low-cost sales, and in-time health sitcom prices rebounded from a drop of RMB 30.5 to 33 per kilogram in Q2 to approximately RMB 40 to 43 per kilogram by the end of Q3. On September 3rd, the National Development and Reform Commission and the FAMR jointly issued the Notice on Matters Concerning Cost Accounting for Low Price Disorder Competition and Key Industrial Products, establishing a firmer regulatory basis for policy comprising. Despite these policy tailings, elevated industry inventories and weak near-term demand continue to make the operating environment challenging. In response, we're taking a disciplined approach and evaluating a reduction in our near-term utilization rate to better align our production with market demand and support the orderly destocking of political inventories. This approach is consistent with our commitment to the long-term healthy development of the solar industry. We are also diversifying beyond our core political business to reduce our exposure to solar PV cyclicality by targeting the fast-growing AI data center power infrastructure market. On June 3, 2026, we announced an investment agreement to establish a manufacturing base for the R&D, manufacturing, and sale of next-generation energy solutions and related equipment for AIDC, including energy storage systems, solid-state transformers, and solid-state circuit breakers. These technologies support the AIDC industry transition to a high-voltage, direct-current architecture such as 800 voltage DC standard advanced by NVIDIA and other leading AI infrastructure providers. The platform is anchored by DACO Group, an affiliated entity under common beneficial ownership with DACO New Energy Corp, which brings over 40 years of power equipment manufacturing expertise, established technology, experienced talent, and deep customer relationship to help accelerate our entry into the segment. We view AIDC power infrastructure as a structural growth opportunity that complements our core business and has the potential to broaden our earnings base. Drawing on our track record of navigating multiple political cycles, we intend to pursue this expansion in a disciplined manner while preserving our balance sheet strength. Despite the challenging market environment, the solar PV industry retains compelling long-term growth prospects. Growing vulnerabilities in global energy markets have heightened concerns about national energy security, underscoring the important role that solar PV and other renewable energy sources can play. As one of the world's lowest-cost producers of high-quality anti-pulse sitcoms supported by a robust balance sheet and zero debt, we remain optimistic about the sector and are well-positioned to capitalize on the anticipated broader market recovery and long-term growth opportunities. We will continue to sharpen our competitive edge by advancing high-end efficiency N-type technology and using digital transformation and AI adoption to optimize costs. As the world accelerates its transition to clean energy, we're confident in our ability to play a leading role in that transition. And now I'll turn the call to our DFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

Thank you, Anita, and hello, everyone. This is Ming Yang, CFO of Tako New Energy. We appreciate you joining our earnings conference call today. I will now go over the company's third quarter of 2026 financial performance. Revenues were $194.2 million compared to $62.7 million in the second quarter of 2026 and $244.6 million in the third quarter of 2025. The sequential increase was primarily driven by higher sales volume as the company resumed normal sales activities in June following its adoption of a more market-oriented sales and pricing strategy. Gross loss was $60.6 million compared to a gross loss of $82.7 million in the second quarter of 2026 and a gross profit of $9.7 million in the third quarter of 2025. Gross margin was negative 31%. compared to negative 132% in the second quarter of 2026 and a positive 4% in the third quarter of 2025. The sequential improvement in gross margin reflected higher selling prices, lower production costs, and lower inventory impairment provisions. Inventory impairment provisions totaled $30.9 million in the third quarter of 2026. down from $55.7 million in the second quarter of 2026. Selling general and administrative expenses were $16.3 million compared to $15.8 million in the second quarter of 2026 and $32 million in the third quarter of 2025. The sequential increase was primarily attributable to higher sales volume. Year-over-year decrease was primarily because the company recognized 18.6 million in non-cash share-based compensation related to the Share Incentive Plan in the third quarter of 2025, while it did not have the same item in the same period of 2026. R&D expenses were 2.7 million compared to 1.6 million in the second quarter of 2026 and 0.6 million in the third quarter of 2025. The increase in R&D expenses was primarily due to R&D of next generation energy solutions for AIDC. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter. As a result of the foregoing, loss from operations was 78.6 million compared to 98.1 million in the second quarter of 2026 and 20.3 million in the third quarter of 2025. Offering margin was negative 40.5% compared to negative 156% in the second quarter of 2026 and negative 8% in the third quarter of 2025. And as a result of foregoing, net loss attributable to Daquan New Energy Corp shareholders was 52.9 million compared to 81.2 million in the second quarter of 2026 and 14.9 million in the third quarter of 2025. Lost per basic ADS was $0.78 compared to $1.20 in the second quarter of 2026 and $0.22 in the third quarter of 2025. Adjusted net loss attributable to DAPO New Energy shareholders, excluding non-cash share-based compensation costs, was $52.9 million compared to adjusted net loss of $81.2 million in the second quarter of 2026 and adjusted net profit of 3.7 million in the third quarter of 2025. Adjusted loss per basic ADS was $0.78 compared to adjusted loss per basic ADS of $0.20 in the second quarter of 2026. And adjusted earnings per basic ADS of $0.05 in the third quarter of 2025. Debit dollar was negative $9.2 million compared to negative $29 million in the second quarter of 2026 and $45.8 million in the third quarter of 2025. Even though margin was negative 0.7%, compared to negative 46.8% in the second quarter of 2026, and 18.7% in the third quarter of 2025. Now on the company's financial condition. As of September 30, 2026, the company had $546.5 million in cash and cash equivalents, compared to $555 million as of June 30, 2026. Short-term investments were $267 million compared to $250 million as of June 30, 2026. Note receivable balance representing bank notes maturing within six months was $161.5 million compared to $71.7 million as of June 30, 2026. Health maturity investments were $51.6 million compared to $51 million as of June 30, 2026. Fixed-term deposits within one year was $965 million compared to $928.9 million in June 30, 2026. Now on the company's cash flows. For the nine months ended September 30, 2026, net cash used in operating activities was $215 million compared to $15 million in the same period of 2025. And for the nine months ended September 30, 2026, Net cash used in investing activities was $235 million compared to $449 million in the same period of 2025. Net cash used in investing activities in 2026 was primarily attributable to the purchase of short-term investments, fixed-term assets, fixed deposits, net of redemption, as well as purchase of PP&E. Purchase of property, planning equipment, and land use rights totaled $93.5 million for the first nine months of the year. And for the nine months ended September 30, 2026, net cash used in financing activities was $7.8 million compared to $32,000 in the same period of 2025. The net cash used in financing activities in 2026 was primarily related to $7.8 million in share repurchases made by the company's subsidiary, Xinjiang Daco, from its minority shareholders on the A share. And that concludes our prepared remarks. We will now take Questions from the audience. Operator, please begin.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Alan Han with JP Morgan. Please go ahead.

Thank you, management, for taking my questions. My first question is related to our sales strategy during the first quarter. Because we have read that the spot price has increased since August, and during the first two quarters, we have been not willing to sell at a very low cost to reserve cashes and helping the market to recover. But the majority of our sales have transacted at lower than the average spot price in the first quarter. You did explain a little bit about about like securing some sales in probably in July time frame signing contract just want to get a little bit more clarity on how should we look out for the fourth quarter sales ASP is it going to be closer to the current spot market prices or is it still going through some of the contracts signed in July which is transacted like at four US dollar per kilogram

Thank you.

Thank you, Alan, for your question. So I think before we shed some light on our sales strategy and the ESPs going forward into the fourth quarter, I would like to give a little bit more background on the recent development of the energy evolution. Because recently there have been conversations happening on a more frequent basis. and we see a stringent tone on the pricing law which players are not allowed to sell below cost. And this previously was really under the debate of whether that means like cash cost, production cost or full cost and we think that's leaning more towards the full cost level. And to give a reference for us, Our Q3, the all-in cost including depreciation and the VAT is around 43 RMB per kilogram. So I would say that would serve as a benchmark for our strategy. However, that being recognized because recently the inventory, the industry level inventory is really accumulating to a relatively high level to around 700,000 electric tons overall. with half at the manufacturers of the political level and half at the wafer downstream customer level. So I would say we recognize the market dynamics, and the goal is to really have our sales at the benchmark level, but I think that's going to undergo a more gradual process, like how in Q2 we have ramped up to above 30, 31, and then now to around 35 average.

Got it. So in that sense, I think this is probably a situation across the industry, which would also mean overall the industry is not or still trying to figure out how to fully follow the guideline, I would imagine.

Yes, because the conversations are still ongoing and so it's not sure from our perspective on the exact level of enforcement. What we can say from our company's perspective is that we 100% engage and promote the healthy and sustainable long-term development of the industry, which you can see from our overall sales volume in the first two quarters as we took a wait and see stance for clear signals from the regulators and from the policy perspective and were reluctant to be the first ones to sell at below cost prices. So we're still actively participating in these anti-involution initiatives. But given the industry dynamics, we also have to assess our own strategies in this situation.

Got it. I guess my second question would be how do we think about our strategy in ramping up or increasing the production in the first quarter maybe? Because it sounds like the situation is not very clear and maybe maintaining a lower production volume would be a safer bet. I just want to get your thoughts on why we are increasing production in the first quarter.

Okay, I think the actual production for the fourth quarter is actually fairly fluid. So there is two approach that we're taking. I think if you look at what we have done is right now we're producing say roughly 15,000 metric tons per month, but the current manufacturing I would say the process and the actual production, for example, I think in terms of quality and cost is actually fairly optimal. I think you can see in the third quarter we actually achieved fairly significant cost reduction while quality improved. So to the extent that we can maintain the current stable process, we would like to do that. But we also recognize that there is this industry initiative or proposal of reducing the entire industry's utilization further to maybe say 35% or so across the industry. So we're also observing and looking at how our industry peers is working on that. So to the extent that if the industry peers can come to the actual action of jointly reducing totalization, certainly we would welcome that and we would follow as well. So I think that's why we have a fairly wide range with regard to our Q4 production level.

Got it, got it. I guess my last question would be like about the policy outlook. I understand like we are now in a kind of like a potential turning point where regulation intervention is like happening but it's time to sort out I mean among players so I would like to hear your thoughts on like when do you think we will get to a point where industry at large will be selling at the designated level like the all-in-cost level

I think that will be a more gradual process because like Ming just mentioned, the players recently have proposed lowering the industry level overall rate to around 35% to balance the overall supply and demand in the year ahead. And that's based on our estimated demand outlook for next year. and including the high level inventory of around 700,000 metric tons currently. We think maintaining at this rate will allow prices to return to a reasonable level but of course I think it would be under the process of first recovering to above cash cost and then to production cost and finally to full cost.

So it's

We do think that's going to take at least a couple months going forward. And also that depends on the timing of when the regulation really evolves and rolls out.

Got it, got it. Okay, thank you very much for sharing with us the current industry backdrop and your strategy. And with that, I'll pass on to the next speaker. Next person.

Thank you, Alan.

The next question comes from Phil Shen with Roth Capital Partners. Please go ahead.

Hey, guys. Thanks for taking my questions. First one, Anita, you talked about you're unsure about what the enforcement levels are of the anti-involution policies. I was wondering if you could talk through what we could expect to see As it relates to enforcement, could the government become more aggressive and is that a key catalyst to support pricing? And then if they do pursue enforcement, what could they actually do that could be meaningful in impact?

Thanks.

So thank you, Phil.

I think based on our engagement with our peer players and with CPIA and from attending these meetings, we do sense a firmer tone in combating the vicious competition in the industry. And I think that's via two fronts that we see. And first is the energy consumption. which would phase out the outdated capacity starting from next year. That's a quite clear point. And the other one is the pricing laws that we just mentioned. But I think that's still under debate because every company has their own strategies, right? And they have their own production sales and inventory levels. So that's still... under the debate, and we do think that we'll see something coming very soon on that front.

Anita, I'd like to explore that a little bit more. So everybody has different levels of where they want to produce and sell and all these things, but ultimately there's got to be some punitive actions that change behavior. What do you think those actions could be?

I think the most straightforward punitive action up front would be the fines for the companies that do not abide. I think it will be easier to to measure from that front because you can clearly see how much energy they use when producing alcohol silicon. So I think the utmost extreme case will be when they just cut off the power for these facilities.

Got it. Okay. Thank you very much. Moving on to pricing, you gave some color for Q4 pricing. Could you talk about how you expect I know a lot of it might depend on some of these enforcement actions and so forth, but it'd be helpful to have some kind of baseline for 27 pricing. Thanks.

I think in the coming quarters, the goal was to really sell above the owing cost. Like I mentioned, for us, the benchmark will be Based on the execution and how strong the policies roll out, we might expect prices to ramp up, suppose that the supply and demand rebalancing happens faster and we see a stricter policy coming out. to recover to let's say 45 to 50 R&D for children range.

Okay, great. That's helpful. Last one for me on your AI data center activities and investments. You know, you're diversifying. You're spending more money in R&D. Can you talk to us how much in 27, how much money could you Invest in these sectors, storage, SSD, solid state, circuit breakers. When could we see revenues? Could we see any revenues in 27 or is this really 2028 or beyond? And then which one would be first of these three end markets or products that you're developing? Thanks.

Yeah, so in terms of the AIDCs, we're quite pleased with the progress right now. So construction is already underway and we've actually broken ground and the pile foundation work has already kicked off and we expect construction to be completed in the first half of next year. and we expect to begin generating sales next year and by the end of next year we expect the project to be operating cash flow positive and that's primarily driven and thanks to our accumulated experiences and client relationships with our affiliated company, the Daco Group, which has over 40 years of experience in electrical equipment. And we will see the fastest growth in AIDC-related, so the more plug-and-play modular solutions for the AIDCs. We will see revenue and orders in that front first.

Okay, there's a lot you said there. You could see revenue in 2017. What are you selling in 2027? Are you selling storage or are you selling solid-state transformers? And how much money are you planning to invest to bring that capacity online? And what exactly are you – sorry if I missed this, but what's the nameplate of whatever capacity you're building? Thanks.

Yes, so for next year, we would have orders in the AIDC-related, the electrical equipment. So what we're selling is actually the integrated solutions for the AIDCs, which include the transformers, the bus gear, the bus docks, and the switch gears, sorry, and the bus docks. And that's what we see growing fastest next year. And the overall capex, we expect... Next year will be 1 billion RMV. That's a rough estimate at this point.

Okay, got it. So 1 billion RMV, and then what kind of revenue could we see in 2027? At what margin?

Thanks.

I think growth margin will be around like 15 to 20% and the net profit margin will be like high single digits.

Okay, thank you. Look forward to learning more about this business and I'll pass it on. Thank you, Bill.

The next question comes from Alan Lau with Jefferies. Please go ahead.

Thanks any time Ming. So I would like to follow up on the enforcement question because I recall back in July there was a meeting between SAMR and the industry players. Back then I think the message was enforcement this time will be in place given that there was two years already. I wonder like because if you look at the ASP of most players or the market prices yes there's a lot of inventory in the industry but what's stopping the authority from enforcing or like is it back to more market-driven after a couple of meetings I think when

We sat down to discuss in more depth what was the thing that somewhat delayed the process was that once we let's say set a overall production volume and sales volume for the industry that could cause potential monopoly in the industry and that would not lead to the long-term healthy development of the polysilicon as well as the entire value chain. I think that was the primary concern. So we had to reconsider how to best set the guidelines for the companies and for the players in the industry.

Understood.

How do you see the growth rate of demand next year globally in China?

I think overall in China, the demand compared to this year would be relatively flat or even as I would say like a YOY decrease. a small amount of YY decreased overall but globally overall maybe around a high single digit growth across the globe. But previously we have installed a significant amount So, this year, I think demand declined quite meaningfully year over year last year.

In terms of numbers, is it in the mid or high 100 gigawatt next year? Maybe you see another 10% decline year over year in China?

Yeah, I think next year will still be around like the high 100 to 200 gigawatts.

I see. So next year on this basis, probably slight decline, while overseas market a bit of slight growth, so net-net pretty flattish.

Yes, that's correct.

I see. So wonder if you see any signs of exit from the market because like one of the leading company in the industry are buying out another one but wonder if you see any of other similar like voluntary acquisition or exit from the market etc.

I think this will be more market-oriented because starting from January 1st of next year, first of all, the outdated capacity, which has a higher energy consumption level, will gradually fade out of the market. And from a more fair perspective, I would say the players currently have a comfortable state with their current namesake capacity. Based on what we're discussing right now, I think all the players will have to lower their utilization rate to balance out the demand. I would say if a player is to acquire another company, if the valuation is at a reasonably low level, that would be an option. or if that poses like a strategic, a different strategy for the company, say overseas expansion or so, I guess that would also be a consideration when we think about potential acquisition.

So by overseas expansion, what do you mean? Like policy looking overseas expansion or because first of all, The U.S. market seems to be quite restrictive on Chinese players' products. Secondly, seems Chinese government is also imposing some restrictions on export of equipment as well.

Yeah, I'm primarily talking about players that might have completed like a certification or like a tricability certification. So our last question is about

Given that the company is still holding on significant amount of cash and stock prices, we'll see a bit depressed at least. So when the company would think it's appropriate to enhance the shareholder's return?

First of all, we recognize the current state and

We strongly believe that returning value to our shareholders remains a priority for our management team and our board. And at the current share price, we are significantly undervalued relative to our balance sheet and also our long-term earnings power. So a shared repurchase is definitely something that we have to be considering. But deciding to launch a program, we want to have a more clear view of how the anti-involution policy is rolled out and enforced, and also how our peers will respond to the current situation. And we think that these factors all directly affect industry pricing and our cash generation ability. and that means to us that really means the right size and form of any potential capital return. So we totally understand that an investor would like us to act now given our strong cash position. But I think waiting a short period of policy clarity would allow us to size any return So this is really a question of timing for our management team. So we are definitely keeping a close eye on the dynamics and we'll discuss the options with the board again in the next coming month and even in Q4 again. will communicate the decision to launch. And once we have that decision finalized, we'll communicate promptly with our shareholders.

I see. Thanks. Thanks, Anita. We'll pass off.

Thank you.

Thank you. Thank you, Ellen.

The next question comes from Erma with Citibank. Please go ahead.

Thank you for taking up my questions.

So my first question is about the sales volume. So what is the expected sales volume in the first quarter and also the volume outlook for 2027?

I think our sales volume in Q4 would be relatively

are close to our production level. So we'll strengthen our efforts and our sales. And I'll say our top priority is really to reduce our inventory.

I'll look forward to 2027.

In terms of sales?

Yes.

I think the goal for us is to maintain our market share. So that will be around 15% of the market for 2027.

Thank you, Anita. So my second question is about the production cost.

So we have seen that the cash production costs have been declining quarter to quarter. Can we also expect a similar trend in the first quarter and also in next year?

So if yes, what will be the percentage scale?

OK. Hello, Erin. Thank you for your question. So we did see fairly significant cost reduction across our facilities in Q3. And this is primarily via a reduction in energy usage, particularly related to electricity, as well as slits and powder. and also in steam via a technical upgrade. So I was benefiting from some benefits from slip-ins and that's the committal of price decline. So I would say based on current trends, we would expect Q4 costs to be similar to Q3 costs based on and the most recent data we have. And then we would expect 2027 to be also similar to Q3 cost maybe with a slight reduction.

Thank you, Ming. And my last question is about the inventory provision.

So I saw that the inventory provision in third quarter is slightly less compared to the second quarter. And I would ask if the current price will still be inventory provision in the fourth quarter, or what is the condition to make the provision?

Okay, I would say If the market remains at the current ASP, we would expect Q4 inventory provision to be less than Q3.

So it means that the market price should be higher than 4Q3, which is your OE cost, then there will no longer be any inventory position. Is that correct?

Or let's say we would expect Q4 ASP to be higher than Q3. So we would expect... I would say a reduction in inventory provision from that perspective.

That's all my questions. Thank you.

Great. Thank you.

The next question comes from Gordon Johnson with GLJ Research. Please go ahead.

Hey, guys.

Thanks for taking the questions. Hello, Gordon. Hey, how's it going? So you've built roughly 70,000 metric tons of inventory this year. With Q4 production guided to 35,000 to 45,000 metric tons, what sales volume do you expect in Q4, and how much of the $140 million in customer advances will be delivered against this quarter? I have a follow-up. Thanks. Okay.

Currently, we expect Q4... Shippen to be higher than the Q4 production. So with the reduction in inventory as a result. And I would say, because we receive payment before we deliver products. So certainly I think, for example, maybe I mean, the $140 million is all contracted for and is expected to be delivered in Q4 while we would continue to receive additional orders as well.

Very helpful. And now that you're free cash flow positive this quarter, congrats on that, by the way, what are the priorities for the $2.6 billion? How much will you commit to the AI data center platform with Daku Group? And how is that related party deal being reviewed and priced and how much cash sits at the DaKu parent level versus Jing Zhang and DaKu? And thanks for the questions again.

Okay. I would say for AIPC our committed TAPEX currently is around $200 million or so in that range and primarily is to build up the facility and related manufacturing and equipment for the IDC business. And certainly on the parent level, right now we have over $300 million. And then on the, this is offshore, and then on the domestic entity, Xinjiang.co, there's roughly 10 billion RMB of cash balance there.

Thanks again.

Great, thank you.

Thank you.

This concludes our question and answer session. I'd like to turn the conference back over 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