SemiLEDs Corporation (LEDS)

Company website Stock Analysis 2020 SEC Form 10-K

325

°C

SemiLEDs’ product Enhanced Vertical LED series offer higher thermal endurance for process temperatures up to 325° C

Products

SemiLEDs manufacture and sell 9 LED chip products

264

Patents

As of August 2019, SemiLEDs issued 264 patents

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The Path to Drawdown: LEDs

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

LED lighting has many environmental advantages. Its efficiency in converting energy into light, rather than heat, helps reduce electricity consumption and air-conditioning usage. For people without access to ample energy, LEDs can be powered with small solar panels and can replace expensive kerosene lamps and their noxious fumes and emissions. Where LEDs are used in streetlights, they can save up to 70% of energy and significantly reduce maintenance costs.

Project Drawdown projects that if LEDs become widely used in the residential and commercial lighting market, they can avoid between 10.2 - 10.8 gigatons of CO2 emissions in residences, and between 5.9 - 6.7 gigatons in commercial buildings. To achieve this, the global market share of LEDs needs to scale rapidly:

<::marker> In 2018, LED lighting comprised 3% of the total commercial lighting market 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 - 2050.

About

SemiLEDs Corporation (stock ticker: LEDS) is a Taiwanese manufacturer of LED chips on metal alloy substrate. SemiLEDs offers a wide range of high-power LED chips and packages.

LEDS's Role in Drawdown

SemiLEDs develops, manufactures and sells LED chips and LED components, LED modules and systems. Their products are used for general lighting and specialty industrial applications, including ultraviolet, or UV, curing of polymers, LED light therapy in medical and cosmetic applications, counterfeit detection, germicidal devices, LED lighting for horticultural applications, architectural lighting and entertainment lighting.

They package their LED chips into LED components, which they sell to distributors and a customer base that is heavily concentrated in a few select markets, including Taiwan, US, the Netherlands, Germany and India. They also sell their Enhanced Vertical (EV) LED product series in blue, white, green and UV in selected markets. They sell their LED chips to packagers or to distributors, who in turn sell to packagers. (2020 annual report, p. 1)

Unfortunately, SemiLEDs’ sales revenue has been declining over the past few years. Their total net sales revenue fell from $9,214 in 2017 to $6,068 in 2020, a 34.1% decline. They attribute (p. 34) this drop to the decline in the prices of LED chips, slowdown in demand for LED luminaries and retrofits, and decrease in service revenues.

LEDS: What We Like

We’ll update this section as SemiLEDs makes more information about their sustainability efforts.

What We Want to See Improve

Achieve Profitability

Since 2011, SemiLEDs has suffered losses (p. 3) because of under-utilization of their manufacturing capacity for their LED chips. In response, they’ve moved and consolidated their LED packaging facility and managed costs and expenses. We eagerly wait for SemiLEDs to bounce back from these predicaments and achieve profitability as soon as possible.

Publish ESG Reports

As of now, SemiLEDs has no information on their sustainability commitments or direct or indirect GHG emissions. To help climate-concerned investors assess SemiLEDs’ carbon footprint, we want to see them publish an annual ESG report with metrics including scope 1, 2 and 3 emissions and GHG emissions avoided.

Enhance Supply Chain Transparency

SemiLEDs purchases raw materials and components from a wide range of suppliers (p. 3) around the world, and has two or more suppliers for a majority of those raw materials. For the purposes of evaluating the carbon footprint of their suppliers, we would like to see SemiLEDs enhance the transparency about their suppliers and their GHG emissions.

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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