The Path to Drawdown: LEDs
Light-emitting diodes (LEDs) were invented in 1994 as high-brightness, highly efficient light bulbs. LEDs work like solar panels in reverse, converting electrons to photons instead of 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 advantages of 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 powered 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:
- In 2018, LED lights comprised 3% of the total commercial lighting market and 2% of the residential lighting market
- By 2050, LEDs should account for 95% and 90% of the residential and commercial markets, respectively
- That’s 12.82% CAGR for residential LED, and 11.21% CAGR for commercial LED lighting between 2018 and 2050.
Applied Materials, Inc. (stock ticker: AMAT) supplies equipment, services and software for the manufacture of semiconductor chips for electronics, flat panel displays for computers, smartphones and televisions, and solar products. They also supply equipment to produce coatings for flexible electronics, packaging and other applications. Their customers include manufacturers of semiconductor chips, liquid crystal and organic light-emitting diode (OLED) displays and other electronic devices.
AMAT's Role in Drawdown
The technologies that Applied Materials sells are numerous and diverse. Their Semiconductor Systems segment provides equipment used in the wafer fabrication steps of creating a semiconductor device, including atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), rapid thermal processing (RTP), chemical mechanical polishing (CMP), wafer inspection, and more.
Their Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs -- similar to LEDs but constructed using organic semiconductors like polymers) and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices as well as equipment for processing flexible substrates.
Applied Materials’ Semiconductor Systems and Display segments’ revenue grew by 10.59% and 9.92% annually, respectively, between 2016 and 2020.
AMAT: What We Like
Applied Materials has been proactive in setting sustainability goals (p. 44) and hitting milestones in the last couple of years, demonstrating their willingness to reduce their carbon footprint:
- Target of 100% renewable energy to power global operations by 2030 and an interim goal of 100% renewable in the US by 2022. As of 2020, 30.9% of AMAT’s global operations, and 60% of US operations come from renewable sources
- 50% reduction in scope 1 and 2 CO2 emissions by 2030, from 2019 baseline. In 2020, scope 1 and 2 CO2 emissions increased 5% because of record production.
- Reducing energy consumption by 30% for their semiconductor products
Applied Materials has also started analyzing (p. 44) their scope 3 carbon footprint. They anticipate (p. 46) quantifying scope 3 emissions across at least 10 of the 15 categories and completing their inventory and setting reduction targets in 2022.