(Yicai) June 4 -- Shares of Daqo New Energy surged by their daily trading limit after the Chinese polysilicon supplier said it plans to invest CNY6 billion (USD886.7 million) building a production base for smart energy systems to diversify business risks and cultivate new profit growth drivers.

Daqo Energy [SHA: 688303] soared 20 percent to CNY22.46 (USD3.32) a share as of lunch break in Shanghai today.

Daqo's unit Daqo Energy Technology Shanghai signed a deal with the management committee of Kunshan Economic and Technological Development Zone in Suzhou to establish a project firm in the area, which will develop the project in two phases, the Chongqing-based parent company announced yesterday.

The first phase will have an investment of about CNY2.1 billion, while work on the second will start at an appropriate time when related industrial policies and investment conditions are met, Daqo noted. The base will focus on the research, development, production, and sales of smart energy system solutions and related equipment, producing energy storage systems and solid-state transformers, breakers, and batteries.

The new factory aligns with China's dual carbon goals, Daqo pointed out, noting that developing the project in Kunshan allows the firm to leverage the Yangtze River Delta region's superior transportation, talent, and supply chain support resources that reduce manufacturing costs and improve response speed.

In addition, the project aligns with Daqo's overall business development strategy, aiming to optimize its business structure, achieve product diversification, enhance comprehensive competitiveness and profitability in the new energy sector, and promote high-quality growth, according to the company.

Established in February 2011, Daqo focuses on the research, development, production, and sales of high-purity polysilicon, with its products used in the photovoltaic industry.

Editor: Martin Kadiev