AXT, Inc. (AXTI)

Company website 2020 Financial Report Stock Analysis

323

Million KWh's

$95.4 million (p. 8) in 2020 revenue

50.75^%

Increase

AXT has a total of 10 subsidiaries and joint ventures

16.26^%

Reduction

View Our Analysis

The Path to Drawdown: Irrigation

Light-emitting diodes (LEDs) were invented in 1994 as high-brightness, highly efficient light bulbs. LEDs work like solar panels but in reverse, converting electrons to photons rather than the other way around. They use 90% less energy than incandescent bulbs, and half as much as compact fluorescents, for the same amount of light. While other lighting technologies convert energy into heat (and most of it wasted), LEDs convert 80% of their energy use into creating light.

There are many environmental benefits to LEDs. Their efficiency in converting energy into light, rather than heat, helps reduce electricity consumption and air-conditioning loads. For people without access to ample energy, LEDs can be illuminated with small solar cells and can replace expensive kerosene lamps and their noxious fumes and emissions. When LEDs are used in streetlights, they can save up to 70% of energy and significantly reduce maintenance costs.

Project Drawdown predicts that if LED lighting becomes ubiquitous in both the residential and commercial lighting market, it can help avoid between 10.2 - 10.8 gigatons of CO2 emissions in residences, and between 5.9 - 6.7 gigatons in commercial buildings. But to get there, the global market share of LEDs needs to scale rapidly:

<::marker> In 2018, LED lights accounted for 3% of the total commercial lighting and 2% of the residential lighting market
<::marker> By 2050, LEDs should account for 95% and 90% of the residential and commercial markets, respectively
<::marker> That’s 12.82% CAGR for residential LED, and 11.21% CAGR for commercial LED lighting between 2018 and 2050.

About

AXT, Inc. (stock ticker: AXTI) designs, develops, manufactures and distributes compound and single element semiconductor wafer substrates. Their wafer substrates are used in 5G infrastructure, data center connectivity, passive optical networks, LED lighting, lasers, sensors, power amplifiers, etc. Headquartered in Fremont, California, AXT, Inc. has manufacturing plants in China.

AXTI's Role in Drawdown

AXT, Inc. manufactures a wide variety of substrate wafers, but their semi-conducting gallium arsenide (GaAs) substrates (p. 3) are what’s used to create high brightness LEDs. LEDs incorporating semi-conducting GaAs substrates are often used to backlight wireless devices and liquid crystal display (LCD) TVs, automotive panels, signage, display and lighting applications. A new application is 3-D sensing chips using vertical cavity surface emitting lasers as an array of lasers on a single chip that can be used in cell phones and other devices. GaAs wafers can also be used for making micro-LEDs.

AXTI: What We Like

We’ll update this section once AXT makes sustainability information available.

What We Want to See Improve

Disclose Sustainability Metrics

As of now, AXT has set no commitments to reduce their GHG emissions. Not only that, there is no mention of climate change or sustainability on their reports or website. As investors increasingly become concerned about the carbon footprint of their portfolios, companies should thoroughly track and report their sustainability metrics. Key among them are direct and indirect GHG emissions, energy consumption by source, and emissions avoided through AXT’s efforts and products.

Reduce GHG Emissions

Coupled with disclosing sustainability metrics, we’re eager for AXT to start reducing their carbon emissions. We particularly want to know the emissions from their supply chain given that their manufacturing facilities are all located in China.

Switch to Environmentally-Friendly Banks

AXT obtained loans from Wells Fargo Bank starting in 2020, and AXT’s subsidiary company entered into a credit facility with the Bank of China in 2019. AXT’s loan agreement with Wells Fargo expired in November 2020, but their subsidiary’s credit agreement with the Bank of China is ongoing. Both of these banks are heavy funders of fossil fuels - Wells Fargo is the world’s top funder of fracking, while the Bank of China is the biggest funder of coal in China. We urge AXT to sever ties with these banks and switch to financial institutions that, as a matter of principle, do not invest in the fossil fuel sectors.

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Allocated	Company	Description
5.00%	Applied Materials (AMAT)	Applied Materials supplies equipment, services and software for LED manufacturing. LEDs help conserve energy and cut emissions
0.56%	Universal Display (OLED)	Universal Display makes organic LEDs, replacing fluorescent and incandescent lighting and improving building energy efficiency
0.47%	Acuity Brands (AYI)	Acuity makes LEDs, smart lighting and building technology solutions that can improve energy efficiency and emissions from buildings
0.40%	Power Integrations, Inc. (POWI)	POWI makes energy-efficiency products like AC-DC power converters and LED drivers. These solutions help buildings conserve energy and cut emissions
0.28%	Diodes Incorporated (DIOD)	Diodes makes a range of semiconductor products for LCD display, LED monitors and lighting. LED lighting is a key solution for cutting building emissions
0.07%	Veeco Instruments Inc. (VECO)	Veeco makes equipment and processing systems used in making high-tech LEDs. Energy-efficient LEDs help buildings cut energy use and emissions
0.05%	Magnachip Semiconductor Corp. (MX)	Magnachip Semiconductor derives its revenue in part from the promotion of LEDs and solar PVs, through the sale of LED products and products used with solar PVs. It creates no products specifically for the fossil fuel industry.
0.02%	Agrify Corporation (AGFY)	Agrify provides LED lighting and other products for high-yield indoor agriculture. Efficient LEDs are an energy-saving alternative to conventional lights
0.02%	Amtech Systems, Inc. (ASYS)	Amtech Systems makes semiconductor equipment for LED and power device applications. LED lighting helps buildings cut emissions
0.02%	AXT, Inc. (AXTI)	AXT sells semiconductor substrates used in LEDs, thermal imaging, and autonomous vehicles. It makes no products specifically for the fossil fuel industry, thus passing our revenue filter.
0.02%	Energy Focus (EFOI)	Energy Focus makes LEDs for the Navy, federal, state and local governments, and big organizations, helping them save energy and cut building emissions
0.02%	Highway Holdings Limited (HIHO)	HIHO makes electronic components, some of which are used in making LEDs. LEDs are energy-efficient lighting that can cut emissions from buildings
0.02%	SemiLEDs Corporation (LEDS)	SemiLEDs makes LED components for lighting and other applications. LEDs are an energy-efficient lighting alternative that can cut building emissions
0.02%	LSI Industries Inc. (LYTS)	LSI Industries makes LEDs for automotive, restaurant, retail and grocery store customers. Energy-efficient LEDs help buildings cut emissions
0.02%	Orion Energy Systems, Inc (OESX)	Orion offers LED lighting and custom-made energy management systems for big organizations - a solution that cuts energy use and emissions from buildings
0.02%	O2Micro International Limited (OIIM)	O2Micro International makes LED products and lighting. LEDs are an energy-efficient lighting alternative that can cut emissions

AXT, Inc. (AXTI)

The Path to Drawdown: Irrigation

About

AXTI's Role in Drawdown

What We Want to See Improve

Related LED Lights Stocks in the Climate Index

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