Xinjiang Daqo New Energy, a leading manufacturer of polysilicon for the global photovoltaic industry, has announced record production of over 21,000 tonnes for the third quarter of 2021.

Average prices of polysilicon were up by 32 percent in the third quarter, and the company's net profit for the quarter was up 1,132.74 percent year on year.

Located in Shihezi City, about a two-hour drive from Urumqi, capital of Xinjiang Uygur Autonomous Region, Daqo is one of the five companies that were sanctioned by the U.S. Department of Commerce in June this year over allegations of using forced Uygur labor. However, the company's records suggest otherwise: By July, among 2,069 of its employees, only 23 were from ethnic groups, accounting for about 1 percent of the total, and none of them were Uygur or Kazak.

Xinjiang is home to 47 ethnic groups and 13 major ethnic communities have established themselves there, including the Uygurs, Kazaks, Mongolians, Huis, Manchus, Xibes, Tajiks and Tatars.

"There are relatively few minority staff and many of them work at mid-level positions in the company, so they tend to earn more," said Geng Weiwei, head of the company's human resources department. He said that average monthly income in the company was about 7,600 yuan ($1188) as of July, whereas the average for employees from minority ethnic groups was 12,000 yuan.

Yu Zhenghai, deputy director of the company's machine maintenance workshop, is a Muslim from Hui ethnic group. Having risen all the way from being a low-cadre worker to his current position in the past decade, Yu said he has benefited from the development of the company and the burgeoning sector.

"There is plenty of room for promotion at the company as long as you have the ability," Yu said. "After going public this year, the company says it plans to issue shares to mid-level managers, including engineers, to retain employees."

Apart from profits, production technology has also improved rapidly. Deputy General Manager Tan Zhongfang of the U.S.-sanctioned company said they have mastered the production of electronics-grade polysilicon, which requires a much higher level of purity than photovoltaic-grade, and can be used for semiconductor devices and circuits.

Daqo is working on a project to produce 1,000 tonnes of electronics-grade polysilicon, for which talent recruitment and technical preparations have completed and site selection is underway. "If all goes well, we will be producing electronics-grade polysilicon in two years," said Tan.

Supplies from China account for over 70 percent of the global polysilicon market. Tan said Daqo's sales to the U.S. make up a relatively small part of its total revenue. 

The world's largest manufacturer of silicon metal – a company that wished not to be named – mainly focuses on the domestic market for raw materials, according to its Vice-General Manager Zhu Zhiqiang.  

Given that supply and demand are both booming, Chinese silicon producers, including Daqo and the aforementioned enterprise, have reported little short-term impact from the U.S. sanctions.

But there are potential threats. Zhu said the knock-on impact would be greater if there is a crackdown on products made by export enterprises that they supply. "Metal silicon is like MSG – it is used in many industries, not just photovoltaic. It's just that current demand from photovoltaic sector is higher," Zhu explained.

Some see U.S. sanctions against silicon makers in Xinjiang as a long-term threat to the world supply chain and worry about the potential for future efforts to contain Chinese technological development through decoupling. 

Shen Feng, technical director of another company on the the U.S. blacklist, said that it will be easier for Chinese manufacturers to move into production of electronics-grade silicon with mature polysilicon manufacturing technology in terms of advanced equipment and quality control. 

"Some countries are already suppressing Chinese chip technology and lithography. Western countries don't want to treat us as equals in making electronics-grade polysilicon," Shen said.