Qorvo
Annual Report 2021

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 3, 2021 or ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36801 ® Qorvo, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 46-5288992 (I.R.S. Employer Identification No.) 7628 Thorndike Road Greensboro, North Carolina (Address of principal executive office) 27409-9421 (Zip Code) (336) 664-1233 Registrant’s telephone number, including area code Title of each class Common Stock, $0.0001 par value Securities registered pursuant to Section 12(b) of the Act: Trading Symbol(s) QRVO Name of each exchange on which registered The Nasdaq Stock Market LLC the registrant the Securities is a well-known seasoned issuer, as defined in Rule 405 of Indicate by check mark if Act. Yes Í No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes Í No ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Í Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $14,839,992,498 as of October 3, 2020. For purposes of such calculation, shares of common stock held by persons who held more than 10% of the outstanding shares of common stock and shares held by directors and officers of the registrant and their immediate family members have been excluded because such persons may be deemed to be affiliates. This determination is not necessarily conclusive. As of May 13, 2021, there were 112,586,812 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE The registrant has incorporated by reference into Part III of this report certain portions of its proxy statement for its 2021 annual meeting of stockholders, which is expected to be filed pursuant to Regulation 14A within 120 days after the end of the registrant’s fiscal year ended April 3, 2021. QORVO, INC. FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 3, 2021 Forward-Looking Information. Item 1. Business. Item 1A. Risk Factors. Item 1B. Unresolved Staff Comments. Item 2. Item 3. Item 4. Mine Safety Disclosures. Properties. Legal Proceedings. INDEX PART I PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Item 6. Selected Financial Data. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Item 8. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Financial Statements and Supplementary Data. Disclosure. Item 9A. Controls and Procedures. Item 9B. Other Information. PART III Item 10. Directors, Executive Officers and Corporate Governance. Item 11. Executive Compensation. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Item 13. Certain Relationships and Related Transactions, and Director Independence. Item 14. Principal Accounting Fees and Services. Item 15. Exhibits and Financial Statement Schedules. Item 16. Form 10-K Summary. Exhibit Index. Signatures. PART IV 2 Page 3 3 10 21 22 22 22 22 24 25 34 36 71 71 71 71 72 72 72 72 73 73 74 77 Forward-Looking Information These forward-looking This report includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, certain disclosures contained in Item 1, “Business,” Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Financial Condition and Results of Analysis of Operations.” statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by the use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “potential,” “estimate,” “continue” and similar words, although some forward- looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations, but our actual results, events and performance could differ materially from those forward-looking statements, including due to the numerous risks and uncertainties summarized in Item 1A, “Risk Factors” in this report. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking the statements, other federal securities laws. than as is required under “forecast,” expressed “predict,” implied by or The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements included in this report, including the notes thereto. PART I ITEM 1. BUSINESS. Company Overview Qorvo® is a leader in the development and commercialization of technologies and products for wireless and wired connectivity. We combine highly differentiated technologies, systems-level expertise and manufacturing scale to serve a diverse set of customers a broad portfolio of innovative solutions that enable a more connected world. Our design expertise and manufacturing capabilities span multiple semiconductor process technologies. Our primary wafer fabrication facilities are in North Carolina, Oregon and Texas, and our primary assembly and test facilities are in China, Costa Rica, Germany and Texas. We also source products and materials through external suppliers. We have design, sales and other manufacturing facilities throughout Asia, Europe and North America. We have two reportable segments: Mobile Products (“MP”) and Infrastructure and Defense Products (“IDP”). MP is a global supplier of cellular, Ultra Wideband 802.15.4z (“UWB”) and Wi-Fi solutions for a smartphones, variety applications, including of Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 and (“SoC”) laptops, system-on-a-chip tablets and Internet of Things wearables, IDP is a global supplier of radio frequency (“IoT”). (“RF”), power management solutions for applications in wireless infrastructure, defense, Wi-Fi, smart home, automotive and IoT. Our MP segment supplies RF solutions to global consumer product companies, and our IDP segment supplies a more diverse portfolio of products with generally longer life cycles to a broader base of customers. Industry Trends Global demand for ubiquitous, always-on connectivity continues to increase, driving data traffic over wireless and wired networks. To keep pace with this demand, wireless and wired markets are undergoing multiyear technology upgrade cycles. increase data throughput, Cellular operators are migrating to 5G to improve reduce signal efficiency, latency and enable massive machine-to-machine connectivity. Because 5G networks operate on different frequencies (low-, mid-, and high-band spectrum) and because they coexist with prior cellular standards, 5G deployments are increasing the content opportunity for Qorvo’s high-performance gallium nitride (“GaN”), gallium arsenide (“GaAs”), and bulk acoustic wave (“BAW”) infrastructure RF products. original transmit (“MIMO”), equipment manufacturers Smartphone (“OEMs”) are adopting 5G to reduce the total cost of the delivery of data (cost/bit), increase network throughput, enable more network devices or “nodes,” and enhance how users connect, communicate and transact business. 5G architectures are more complex than 4G architectures and can include Multiple-Input/ Multiple-Output in the diversity path, higher frequencies with wider bandwidths and new receive paths featuring carrier aggregation (“CA”). The increased functionality is expected to add RF content and the added complexity favors best-in-class, highly integrated RF solutions. 5G smartphone units are forecast to approximately double in calendar year 2021. Beyond smartphones, 5G enables new use cases in autonomous vehicles, augmented/virtual reality, and connected IoT devices powering smart homes and smart cities, which is increasing the for Qorvo’s high-performance content opportunity GaAs, silicon on insulator (“SOI”), and BAW cellular RF products. In Wi-Fi, network and device OEMs are migrating to next-generation standards, Wi-Fi 6 and 6E, to support the higher wireless data demand, while the new standards are enabling new IoT use cases. The U.S. Federal Communications Commission approved the use of 5.9 GHz to 7.1 GHz for Wi-Fi 6E, and additional countries are making spectrum available for Wi-Fi 6E. The multiyear upgrade to Wi-Fi 6 and 6E and the addition of new use cases are increasing the content opportunity for Qorvo’s high-performance Wi-Fi RF solutions. 3 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 In IoT, an expanding set of applications, from industrial equipment to wearable fitness trackers, are expected to comprise billions of connected intelligent devices that sense, process and communicate data. Given the diversity of applications and protocols, this is increasing the content opportunity for Qorvo’s multi- protocol (Bluetooth® Low Energy, Zigbee and Thread) ultra-low power wireless solutions. Also, there is increasing demand for secure and accurate location and data communication services, and this is increasing the content opportunity for Qorvo’s high- performance UWB solutions. the trend In defense and aerospace applications, toward phased array to higher the shift radar, frequencies and the sharing of existing frequency bands with each expanding the demand for Qorvo’s high-performance defense RF technologies and solutions. communications cellular are Markets Our business is diversified primarily across the following end markets: mobile devices; cellular base stations; defense and aerospace; Wi-Fi customer premises equipment; smart home; automotive; power management; and other markets. largest market, mobile Mobile Devices includes Our smartphones, wearables, laptops, tablets and other devices. This market is characterized by increasing demand for data throughput, the transition to 5G cellular technology and the proliferation of new communication and location-based services. devices, There are three major use cases for 5G: enhanced mobile broadband, ultra-low latency, and massive machine-to-machine. Enhanced mobile broadband enables faster data speeds and greater capacity. Ultra-low latency enables real-time, mission critical applications, including autonomous driving, industrial robotics care. Massive remote medical machine-to-machine enables billions of devices to connect on a single network, to sense, communicate and process on a scale not previously possible. and The transition to 5G involves advanced RF modulation including across a wide range of low-band, mid-band (“sub-7 GHz”) and high-band spectrum (millimeter wave). 5G architectures introduce a series of challenges related to coexistence, signal integrity, efficiency and system complexity. frequency bands, these invests address leadership, solutions. Qorvo challenges, mobile in advanced To device manufacturers require best-in-class highly integrated semiconductor RF technology packaging capabilities and systems-level expertise to provide customers high-performance discrete and highly integrated RF solutions that solve their most critical RF challenges. To enable secure precision-location UWB services, mobile location accuracy, technology, given its superior adopting devices are 4 reliability and security technologies. versus other short-range Cellular Base Stations The cellular base station market is characterized by the deployment of 5G networks over sub-7 GHz and millimeter wave frequencies, often with massive MIMO active antenna arrays, which significantly increase the number of RF transmit and receive channels. These 5G networks require a broad portfolio of highly increase capacity and efficient RF solutions that expand coverage in a compact form factor. Qorvo supports the world’s leading cellular base station OEMs with a broad portfolio of RF solutions serving all major/applicable frequency bands. Defense and Aerospace Within the defense and aerospace markets, we focus primarily on high-power phased array radar, electronic warfare (“EW”) and communications systems. We are a leading supplier of RF products and compound semiconductor foundry services to defense primes and other global defense and aerospace customers. We also engage directly with defense customers to develop next-generation semiconductor and packaging technologies. and coverage and more Wi-Fi Customer Premises Equipment Wi-Fi customer premises equipment includes routers, gateways and enterprise infrastructure. In this market, consumer and enterprise customers want broader Wi-Fi reliable faster connectivity for video streaming, augmented/virtual reality and other services, often in high density user environments. The evolution of the Wi-Fi standard from 802.11ac (Wi-Fi 5) to 802.11ax (Wi-Fi 6), and more recently the addition of Wi-Fi 6E, are standard changes is to help meet consumer data demands. Wi-Fi adopting higher order MIMO architectures to maximize range and capacity. With each new standard and architecture, there are new and more complex requirements for more complex RF front end solutions. Smart Home Smart home systems can be connected wirelessly to allow remote access and control of various household convenience, entertainment, functions, enhancing security and comfort. Smart home devices can be controlled through a computer, smartphone or through a direct peer-to-peer connection such as a voice- enabled remote control. These devices use industry- standard technologies, such as Bluetooth® Low Energy, Zigbee, and Thread to link to a central gateway that accesses the internet via Wi-Fi. Manufacturers of smart home platforms prefer standards-agnostic, multi-protocol solutions that enable coexistence of multiple radios and deliver extended battery life in a compact form factor. Automotive Next-generation wireless technologies are enabling new use cases in automotive wireless connectivity, including vehicle-to-everything (“V2X”) applications which facilitate direct, high-speed communication. These new use cases require complex RF solutions spanning multiple protocols, including GPS, satellite radio, Long-Term Evolution (“LTE”), Wi-Fi, 5G (sub-7 GHz and millimeter wave) and UWB. In automotive applications, UWB enables more secure access than current technologies. critical is a core requirement Power Management Power efficiency in all electronics. With the trend toward more battery- operated portable devices, power management is increasingly to enhancing efficiency and extending battery life. Power management solutions provide customers digital control of analog power, minimize energy use, significantly reduce solution size and cost, and improve system reliability. Our advanced power management solutions are supporting the migration of consumer products to more efficient brushless DC motors and the transition of compute and storage to more responsive and reliable solid state drives. radio cable, compete point-to-point in which we Other Markets include Other markets broadband and biotechnology testing. In broadband cable, our DOCSIS 3.1 solutions increase bandwidth to the home to optimize upstream and downstream data connectivity. In UWB, our precision-location solutions enable secure association, navigation and location for a range of IoT applications. In emerging applications, we have developed RF-based biotechnology testing solutions using our bulk acoustic wave technology. Our technology veterinarian applications. We plan to use our technology for human applications, beginning with COVID-19 antigen testing, given our recent emergency use authorization from the FDA. currently used in is Products Qorvo’s improve performance, reduce complexity, enable smaller form factors and solve other critical RF challenges. products portfolio broad of Mobile Devices integrated modules Our products include highly incorporating various combinations of switches, power amplifiers (“PAs”), filters, multiplexers and other components, as well as RF power management integrated circuits, antenna tuners, antenna-plexers, discrete filters and duplexers, discrete switches and UWB system solutions. Cellular Base Stations Our integrated solutions for massive MIMO systems include switch-LNA modules, variable gain amplifiers, Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 discrete PAs and integrated PA Doherty modules. Our GaAs and SOI solutions offer differentiated low noise performance, while our GaN PAs target higher frequency bands and combine high linearity and efficiency with low power consumption. enable connections interference-free Defense and Aerospace Our products for defense radar applications bring new detection capabilities to help sense, communicate and protect. Our power amplifiers support phased array radars and communication systems, and our premium filters and optimize frequency spectrum to expand network capacity and extend coverage. Our Spatium® line of solid-state, high-power products provide highly reliable, efficient EW solutions applications across a broad frequency spectrum. We have combined the portfolio of LNAs, mixers, phase shifters, switches, multipliers and attenuators from our acquisition of Custom MMIC Design Services, Inc. (“Custom MMIC”) in fiscal 2020 with our product offerings to enable integrated multi-chip modules. broadband complex for Wi-Fi Customer Premises Equipment In Wi-Fi, we offer PAs, switches, LNAs and BAW filters. We integrate combinations of these into RF front end modules (“FEMs”). Smart Home Qorvo offers multi-standard SoCs (Zigbee, Bluetooth® Low Energy, Thread) and single standard UWB SoCs, consisting of SoC hardware, firmware and application software. To augment the SoC, we also offer various configurations of advanced filtering and amplification as well as Wi-Fi 6 FEMs. Automotive We provide a variety of automotive RF connectivity products, including BAW filters, LNAs, switches, PAs and front end solutions. We also supply UWB SoC solutions. Our products meet or exceed automotive AEC-Q100 quality and reliability standards, and we supply the leading automotive OEMs, tier-1 suppliers and chipset vendors. Power Management We supply Power Application Controllers (PACs®) and ICs that significantly programmable analog power reduce solution size and cost, improve system reliability and shorten system development time. Our products manage voltages from 1.8V to 600V and power up to 4,000 watts. advanced technologies Research and Development We invest in research and development (“R&D”) to products develop necessary to serve our markets. Our R&D activities typically design win opportunities for major programs at key customers, which require best-in-class performance, size, cost in R&D to and functional density. We also invest competitive support large and 5 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 improvement develop new products for broader market applications. Our R&D efforts require us to focus on both continuous in fundamental areas including materials, software, semiconductor process technologies, simulation and modeling, systems architecture, circuit design, device packaging, module integration and test. innovation and suppliers, We have developed multiple generations of GaAs, GaN, BAW and surface acoustic wave (“SAW”) process technologies that we manufacture. We invest in these technologies to improve device performance, reduce die size and reduce manufacturing costs. We also help develop and qualify technologies in cooperation with key and microelectromechanical system (“MEMS”) technology for switches and tuners, silicon germanium (“SiGe”) for amplifiers, and bulk complementary metal oxide semiconductor for power management devices and SoC solutions. We combine these technologies with design methods, proprietary intellectual property (“IP”) and other expertise to improve performance, increase integration and reduce the size and cost of our products. (“CMOS”) including SOI and qualify develop advanced packaging We technologies to reduce component size, improve performance and reduce package costs. We also invest in large scale module assembly and test capabilities to bring these technologies to market in very high volumes. Raw Materials We purchase numerous raw materials, passive components and substrates for our products and In our GaN and GaAs manufacturing processes. manufacturing operations, we use several raw materials, including GaN on silicon carbide wafers and In our acoustic filter manufacturing GaAs wafers. operations, lithium niobate and lithium tantalate. The silicon devices in our products are sourced from foundries. raw materials include silicon, Our manufacturing strategy includes a balance of internal and external capacity. Our manufacturing sites are geographically distributed, as are our suppliers. We routinely qualify additional manufacturing sites and sources of supply to reduce the risk of supply interruptions or price increases, and we closely monitor our suppliers’ key performance indicators. We seek to ensure that materials and manufacturing services are available from multiple sources. the semiconductor During fiscal 2021, industry experienced supply constraints for certain items, including capacitors, laminates and silicon. We expect the industry to address these constraints over time. In addition, we have long-term strategic partnerships, and we are able to add suppliers, redesign products using alternate materials, qualify multiple silicon foundries, and extend or add supply commitments, to provide flexibility in our supply chain. 6 Manufacturing The majority of our products are multi-chip modules utilizing multiple semiconductor and acoustic material processing technologies. These products have varying degrees of complexity and contain semiconductors are manufactured and internally or sourced from outside supply chain partners. components other that fabrication facilities for We operate wafer the production of BAW, GaN, GaAs, SAW and TC-SAW wafers in North Carolina, Oregon and Texas. We also use multiple silicon-based process technologies, including SOI, SiGe and bulk CMOS, which are principally sourced from leading silicon foundries located throughout the world. We have a global supply chain and ship millions of units per day. We have our own flip chip, wire bond and wafer-level packaging (“WLP”) technologies. We primarily use internal assembly facilities in China, Costa Rica, Germany and the U.S., and we also use external suppliers for these and other packaging technologies. factors, Manufacturing yields can vary significantly between including products, based on a number of product complexity, performance requirements and the maturity of our manufacturing processes. To maximize wafer yields and quality, we test products multiple times, maintain continuous reliability monitoring and conduct inspections quality numerous throughout the production flow. control Our internal manufacturing facilities require a high level of fixed costs, consisting primarily of occupancy costs, maintenance, repair, equipment depreciation, and labor costs related to manufacturing and process engineering. Semiconductor fabrication requires highly controlled and clean environments. Die on a wafer can be found to be nonfunctional or wafers can be rejected due to a number of including minute impurities, variances in the fabrication process or defects in the masks used to transfer circuit patterns onto the wafers. reasons, internal self-audits. Our manufacturing facilities worldwide are certified to the ISO 9001 quality standard, and select locations are certified to additional automotive (IATF 16949), aerospace (AS 9100) and environmental (ISO 14001) standards. These stringent standards are audited and certified by third-party auditors in addition to our ISO 9001 continuous standard is based on a number of quality management principles including a strong customer the motivation of top management, the process approach and continual improvement. IATF 16949 is the highest international quality standard for the global automotive industry additional requirements for the automotive industry. AS 9100 is the standardized quality management system for the aerospace industry. ISO 14001 is an internationally incorporates specific focus, and The upon standard agreed environmental management system. We require that all of our key vendors and suppliers be compliant with select standards, as applicable. for an Customers We design, develop, manufacture and market products for leading U.S. and international OEMs and original design manufacturers (“ODMs”). We also collaborate with leading reference design partners. We provide products to our largest end customer, Apple Inc. (“Apple”), through sales to multiple contract manufacturers, which in the aggregate accounted for 30% and 33% of total revenue in fiscal years 2021 and 2020, respectively. Huawei Technologies Co., Ltd. and affiliates (“Huawei”) accounted for less than 5% of total revenue in fiscal 2020. These customers primarily purchase RF solutions for a variety of mobile devices. See Note 2 of the Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this report for further information. revenue in fiscal 2021 and 10% of total Some of our sales to overseas customers are subject to export licenses or other restrictions imposed by the U.S. Department of Commerce (see Risk Factors in Part I, Item 1A set forth in this report). Sales and Marketing We sell our products worldwide directly to customers as well as through a network of U.S. and foreign sales representative firms and distributors. We select our domestic and foreign sales representatives based on technical skills and sales experience, the presence of complementary product lines and the customer base served. We provide ongoing educational training about our products to our internal and external sales representatives and distributors. We maintain an internal sales and marketing organization that is responsible for key account management, application engineering and advertising literature, and technical presentations for industry conferences. Our sales and customer support centers are located near our customers throughout the world. customers, support sales for Our website contains extensive product information and includes an online store where customers can learn about our products, download product catalogs, order product samples and request evaluation boards. Our global team of application engineers interacts with customers during all stages of design and production, maintains regular contact with customer engineers, provides product application notes and engineering data, and assists in the resolution of technical problems. We maintain close relationships with our customers and platform providers and provide them to help anticipate future strong technical support product customer needs experience. enhance their and Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Seasonality Our sales are the result of standard purchase orders or specific agreements with customers. Historically, we have experienced seasonal fluctuations in the sale of mobile products, with revenue typically strongest in our second and third fiscal quarters. introductions. Our customers’ product Competition We operate in a competitive industry generally characterized by rapid advances in technology and new life product cycles can be short, and our competitiveness depends on our ability to improve our products and processes faster than our competitors, anticipate changing customer requirements and successfully develop and launch new products while reducing our costs. Our competitiveness is also affected by the quality of our customer service and technical support and our ability to design customized products that address each requirements. The selection customer’s particular process for our products is highly competitive, and our customers provide no guarantees that our products will be included in the next-generation of products introduced. Inc.; MP competes primarily with Broadcom Inc.; Murata Manufacturing Co., Ltd.; NXP Semiconductors N.V.; Qualcomm Technologies, Skyworks IDP competes primarily with Analog Inc. Solutions, Devices, Inc.; MACOM Technology Inc.; Cree, Solutions Inc.; NXP Semiconductors N.V.; Silicon Laboratories Inc.; Solutions, STMicroelectronics N.V.; and Sumitomo Electric Device Innovations. Skyworks Inc.; and and positions Many of our current and potential competitors have entrenched market customer relationships, established patents and other IP and substantial technological capabilities. In some cases, our competitors are also our customers or suppliers. Additionally, many of our competitors may have significant technical, manufacturing and marketing resources, which may allow them to more quickly implement new technologies and develop new products. financial, Intellectual Property Our IP, including patents, copyrights, trademarks and trade secrets, is important to our business, and we actively seek opportunities to leverage our IP portfolio to promote our business interests. We also actively seek to monitor and protect our global IP rights and to deter unauthorized use of our IP and other assets. Such efforts can be difficult because of the absence of international standards and laws. Moreover, we respect the IP rights of others and have implemented policies and procedures to mitigate the risk of infringing or misappropriating third-party IP. consistent Patent applications are filed within the U.S. and in other countries where we have a market presence. On 7 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 various reasons, occasion, some applications do not mature into including rejections patents for based on prior art. In addition, the laws of some foreign countries do not protect IP rights to the same extent as U.S. laws. We have approximately 2,180 patents that expire from 2021 to 2041. We also continue to acquire patents through acquisitions or direct prosecution efforts and engage in licensing transactions to secure the right to use third-parties’ patents. In view of our rapid innovation and product of pace development governments’ patenting processes, there is no guarantee that our products will not be obsolete before the related patents expire or are granted. However, we believe the duration and scope of our most relevant patents are sufficient to support our business, which as a whole is not significantly dependent on any particular patent or other IP right. As we expand our products and offerings, we also seek to expand our patent prosecution efforts to cover such products. comparative and the on rely non-disclosure We periodically register federal trademarks, service marks and trade names that distinguish our product brand names in the market. We also monitor these marks for their proper and intended use. Additionally, we confidentiality agreements to protect our interest in confidential and proprietary information that gives us a competitive advantage, including business strategies, unpatented inventions, designs and process technology. Such information is closely monitored and made available only to those employees whose responsibilities require access to the information. and Human Capital We believe that our employees are our greatest assets, and we must continue to attract, develop, retain and motivate our employees to remain competitive and execute our business strategy. We strive to meet these objectives by offering competitive pay and benefits in a diverse, inclusive and safe workplace, and by providing opportunities for our employees to grow and develop their careers. and 700 As of April 3, 2021, we had approximately 8,400 employees temporary approximately employees in 21 countries. By region, approximately 50% of our total employees are located in the United States, 41% in Asia, 5% in Europe and 4% in Costa Rica. By major job function, approximately 58% are are engineering manufacturing, and 16% are professional or other administrative. technician roles, 26% or Competitive Pay and Benefits We provide compensation and benefit packages that we believe are competitive within the applicable market. We use a combination of compensation and other programs (which vary by region and salary grade) to attract, motivate and retain our employees, including semiannual performance bonuses, stock 8 awards, an employee stock purchase plan, retirement programs, and health and wellness benefits and programs. We benchmark our compensation and benefit packages annually to ensure we remain competitive with our peers and continue to attract and retain talent throughout our organization. Employee Recruitment, Retention and Development We are committed to recruiting, hiring, retaining, promoting and engaging a diverse workforce to best serve our global customers. We have established relationships with professional associations and industry groups to proactively attract talent, and we partner with universities to recruit undergraduate and internship program and graduate students for our entry level positions. We also invest in employee development programs to provide employees with the training and education they need to help achieve their career goals, build relevant skills, and lead their organizations. We believe our competitive compensation and benefit programs, along with career growth and development opportunities offered by us, promote longer employee tenure and reduce turnover. We monitor employee turnover rates as our success depends upon retaining and investing in our highly skilled manufacturing and technical has industry consistently been below the technology average. staff. Our attrition global rate in our workplace Diversity, Equity and Inclusion At Qorvo, we value the uniqueness that an inclusive and diverse global team brings to our company, and we are focused on creating an environment that leverages the perspectives and contributions of each employee. Diversity, equity and inclusion principles are activities, included guidelines, processes and programs. Employees are equipped with the knowledge and capabilities to welcome and embrace diversity and advocate for inclusion. Through employee-driven groups called Qorvo Employee Networks, our employees have an opportunity to connect through shared interests and goals, and spur growth through professional and personal development. These and other efforts help foster an inclusive workplace of talented employees and drive employee engagement. training, Safety, Health and Wellness the Responsible Business We are a member of Alliance (“RBA”), an industry coalition dedicated to driving sustainable value for workers in global supply chains, among other things. As an RBA member, we have adopted the RBA Code of Conduct, which that working to establishes conditions are safe, that employees are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. The RBA Code of Conduct has been reflected in our other employee policies and procedures. standards ensure In response to the COVID-19 pandemic, we reduced business travel and instituted comprehensive safety protocols for all Qorvo facilities. We successfully transitioned a significant number of our employees to work from home and we invested in additional wellness benefits, including reimbursement programs to help employees improve home workspaces. As always, we prioritize safe working conditions. We are committed to an injury free workplace and provide dedicated workplace training and leadership support to reduce or eliminate health and safety risks. In fiscal 2021, we achieved a declining injury rate for the third consecutive year and recorded our lowest injury rate in Qorvo’s history. Government Regulations By virtue of operating our wafer fabrication facilities, we are subject to a variety of extensive and changing federal, state and local domestic and international governmental laws, regulations and ordinances related to the use, storage, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in the manufacturing process. We pretreat and dispose of our wastewater from our manufacturing facilities to requirements. Our meet regulatory hazardous waste is only sent to licensed and permitted disposal facilities. State agencies require us to report storage and emissions of environmentally hazardous materials, retained and appropriate personnel to help ensure compliance with all applicable environmental regulations. We believe that costs arising from existing environmental laws will not have a material adverse effect on our financial position or results of operations. exceed have we or We are an ISO 14001:2015 certified manufacturer with a comprehensive Environmental Management System (“EMS”) in place to help ensure control of the environmental aspects of the manufacturing process. Our EMS mandates compliance and establishes appropriate checks and balances to minimize the potential for non-compliance with environmental laws and regulations. We actively monitor the hazardous materials that are used in the manufacture, assembly and test of our products, particularly materials that are retained in the final product. We have developed specific restrictions on the content of certain hazardous materials in our products, as well as those of our suppliers and outsourced manufacturers and subcontractors. This helps to ensure that our products are compliant with the requirements of the markets into which the products will be sold and with our customers’ requirements. are example, compliant with the European Union RoHS Directive (2011/65/EU on the Restriction of Use of Hazardous products our For Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Substances), which prohibits the sale in the European Union market of new electrical and electronic equipment containing certain families of substances above a specified threshold. Historically, the costs to comply with applicable environmental regulations have not been material, and we currently do not expect the costs of complying with existing environmental regulations to have a material adverse effect on our liquidity, capital resources or financial condition in fiscal 2022. We are also subject to import/export controls, tariffs and other trade-related regulations and restrictions in countries in which we have operations or otherwise do regulations, and business. These controls, restrictions (including those related to, or affected by, United States-China relations, as discussed below in Item 1A, Risk Factors) may have a material impact on our business, including our ability to sell products and to manufacture or source components. tariffs, Government regulations are subject to change in the future, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business, results of operations or financial condition. Access to Public Information We make available, free of charge through our website (http://www.qorvo.com), our annual and quarterly reports on Forms 10-K and 10-Q (including related filings in iXBRL format) and current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file these reports with, or furnish them to, the United States Securities and Exchange Commission (“SEC”). The public may also request a copy of our forms filed with the SEC, without charge upon written request, directed to: Investor Relations Department Qorvo, Inc. 7628 Thorndike Road Greensboro, NC 27409-9421 The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K. We have included our website address as a factual reference and do not intend it as an active link to our website. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other file information regarding issuers that electronically with the SEC at http://www.sec.gov. 9 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 ITEM 1A. RISK FACTORS. You should carefully consider the risks described below in addition to the other information contained in this report before making an investment decision with to any of our securities. Our business, respect financial condition or results of operations could be materially impacted by any of these risks. The risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us, or other factors not perceived by us to present material risks to our business at this time, may impair our business operations, financial condition, or results of operations. Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, financial condition or results of operations. ‰ Our operating results fluctuate and are substantially dependent and achieving design wins as our industry’s product life cycles are short and our customers’ requirements change rapidly. new products developing on ‰ We depend on several large customers for a substantial portion of our revenue. ‰ We face risks of a loss of revenue if contracts with the United States government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced. ‰ The COVID-19 pandemic could materially adversely condition and results of financial affect our operations. ‰ We depend heavily on third parties. ‰ We face risks related to sales through distributors. ‰ We face risks associated with the operation of our manufacturing facilities, and if we experience poor manufacturing yields, our operating results may suffer. ‰ We are subject to inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products. ‰ We sell certain of our products based on reference designs of platform providers, and our inability to effectively manage evolving relationships with these companies may have an adverse effect on our business. ‰ We are subject to risks from international sales and or maintain our operations. ‰ We may not be able to generate sufficient cash to service all of our debt, including our senior notes due 2029 and 2031, respectively, or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us. ‰ Our acquisitions and other strategic investments could fail financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. to achieve our 10 ‰ In order to compete, we must attract, retain, and motivate key employees, and our failure to do so could harm our business and our results of operations. ‰ We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties, and we may be subject to claims of infringement of third- party intellectual property rights. ‰ Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer. For a more complete discussion of the material risks facing our business, see below. Risks Related to Our Business and Industry for other reasons, our Our operating results fluctuate. Our revenue, earnings, margins and other operating results have fluctuated significantly in the past and may fluctuate significantly in the future. If demand for our products fluctuates as a result of economic revenue and conditions or profitability could be impacted. Our future operating results will depend on many factors, including the following: ‰ business, political and macroeconomic changes, including trade restrictions and recession or slowing growth in the semiconductor industry and the overall global economy; ‰ changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices; ‰ fluctuations in demand for our customers’ products; ‰ our ability to forecast our customers’ demand for our products accurately; that ‰ the ability of third-party foundries and other third- party suppliers to manufacture, assemble and test our products in a timely and cost-effective manner; ‰ our customers’ and distributors’ ability to manage they hold and to forecast the inventory accurately their demand for our products; ‰ our ability to achieve cost savings and improve yields and margins on our new and existing products; ‰ our ability integrate into our business, and realize the expected benefits of, our acquisitions and strategic investments; and to successfully ‰ our ability to utilize our capacity efficiently or to acquire additional capacity in response to customer demand. Our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline. Our operating results are substantially dependent on developing new products and achieving design wins as our industry’s product life cycles are short and our customers’ requirements change rapidly. Our largest markets are characterized by the frequent introduction of new products in response to evolving product requirements, driven by end user demand for more functionality, improved performance, lower costs and a variety of largest MP customers typically refresh some or all of their product portfolios by releasing new models each year. In some cases, product designs we pursue represent either opportunities to substantially increase our revenue by winning a new design or a risk of a substantial decrease in revenue by losing a product on which we are the incumbent. form factors. Our Our success depends on our ability to develop and introduce new products in a timely and cost-effective manner and secure production orders from our customers. The development of new products is a highly complex process, and we have experienced delays in completing the development and introduction times. Our successful product of new products at factors, development depends on a number of including the following: ‰ our ability to predict market requirements and define and design new products that address those requirements; to design products that meet our performance cost, size and ‰ our ability customers’ requirements; ‰ our ability to introduce new products that are competitive and can be manufactured at lower costs or that command higher prices based on superior performance; ‰ acceptance of our new product designs; ‰ the availability of qualified product design engineers; ‰ our timely completion of product designs and ramp up of new products according to our customers’ needs with acceptable manufacturing yields; and ‰ market acceptance of our customers’ products and the duration of the life cycle of such products. major pursue Most that we We may not be able to design and introduce new products in a timely or cost-efficient manner, and our new products may fail to meet market or customer design requirements. product opportunities involve multiple competitors, and we could lose a new product design opportunity to a competitor that offers a lower cost or equal or superior performance. If we are unsuccessful in achieving design wins, our revenue and operating results will be adversely affected. Even when a design win is achieved, our success is not assured. Design wins may require significant expenditures by us and typically precede a higher volume revenue by six to nine months or more. Many customers seek a second source for all major components in their devices, which can significantly reduce the revenue obtained from a design win. In many cases, the average selling prices of our products decline over the products’ lives, Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 and we must achieve yield improvements, cost reductions and other productivity enhancements in order to maintain profitability. The actual value of a design win to us will ultimately depend on the commercial success of our customers’ products. We depend on several large customers for a substantial portion of our revenue. A substantial portion of our MP revenue is currently from several large customers. Our future operating results will be affected by both the success of our largest customers and on our success in diversifying our products and customer base. Collectively, our two largest end customers accounted for an aggregate of approximately 39%, 43% and 47% of our revenue for fiscal years 2021, 2020 and 2019, respectively. If demand for their products increases, our results are favorably impacted, while if demand for their products decreases, they may reduce their purchases of, or stop purchasing, our products and our operating results would suffer. Even if we achieve a design win, our customers can delay or cancel the release of a new handset for any reason. Most of our customers can cease incorporating our products into their devices with little notice to us and with little or no penalty. The loss of a large customer and failure to add new customers to replace lost revenue would have a material adverse effect on our business, financial condition and results of operations. States government-sponsored We face risks of a loss of revenue if contracts with the United States government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced. We receive a portion of our revenue from the United States government and from prime contractors on United programs, principally for defense and aerospace applications. These programs are subject to delays or cancellation. Further, spending on defense and aerospace programs can vary significantly depending on funding from the United States government. We believe our government and defense and aerospace business has been negatively affected in the past by external factors such as sequestration and political pressure to reduce federal defense spending. Reductions in defense and aerospace funding or the loss of a significant defense and aerospace program or contract would have a material adverse effect on our operating results. The COVID-19 pandemic could materially adversely affect our financial condition and results of operations. The COVID-19 pandemic has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors uncertainty is and future such measures regarding continued and suppliers. potential There 11 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 and measures, and restrictions on our access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could limit our capacity to meet customer demand and have a material adverse effect on our financial condition and results of operations. restrictions disruptions or an cause The pandemic has significantly increased economic and demand uncertainty. The continued effects of the COVID-19 pandemic may economic slowdown, which would adversely affect our business, demand for our products, and the value of our common stock. The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed. The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. We depend heavily on third parties. We purchase numerous component parts, substrates and silicon-based products from external suppliers. We also utilize third-party suppliers for numerous services, including die processing, wafer bumping, test and tape and reel. The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, product quality and fabrication costs. The semiconductor industry has experienced supply constraints for certain items, including capacitors, laminates and silicon. If we experience any significant difficulty in obtaining the materials used in the conduct of our business, these supply challenges may limit our ability to fully satisfy the demand for some of our products. Furthermore, the COVID-19 pandemic has created heightened risk that external suppliers may be unable to perform their obligations to us or suffer financial distress due to the economic impact of the pandemic and the regulatory measures that have been enacted by governments to contain the virus. Although our key suppliers commit to us to be compliant with applicable ISO 9001 and/or TS-16949 quality standards, we have experienced quality and 12 reliability issues with suppliers in the past. Quality or reliability issues in our supply chain could negatively affect our products, our reputation and our results of operations. on depend technical distributors’ distributors. We We face risks related to sales through distributors. We sell a significant portion of our products through third-party these distributors to help us create end customer demand, provide technical support and other value-added services to customers, fill customer orders, and stock our products. We may rely on one or more key distributors for a product, and a material change in our relationship with one or more of these distributors or their failure to perform as expected could reduce our revenue. Our ability to add or replace distributors for some of our products may be limited because our end customers may be hesitant to accept the addition or replacement of a distributor due to advantages in the and incumbent favorable business terms related to payments, discounts and stocking of acceptable inventory levels. Using third parties for distribution exposes us to many risks, including competitive pressure, concentration, credit risk, and compliance risks. Other third parties may use one of our distributors to sell products that compete with our products, and we may need to provide the distributors to focus them on the sale of our products. Our face financial difficulties, including bankruptcy, which could harm our collection of accounts receivable and financial results. Violations of the Foreign Corrupt Practices Act or similar laws by our distributors or other third-party intermediaries could have a material impact on our business. Failure to manage risks related to our use of distributors may reduce sales, increase expenses, and weaken our competitive position. distributors may incentives financial support other and to We face risks associated with the operation of our manufacturing facilities. fabrication facilities in North We operate wafer Carolina, Oregon and Texas. We currently use several international and domestic assembly suppliers, as well as internal assembly facilities in China, Costa Rica, Germany and the U.S., to assemble and test our products. We currently have our own test and tape and reel facilities located in China, Costa Rica and the U.S., and we also utilize contract suppliers and partners in Asia to test our products. results, A number of factors related to our facilities will affect our business and financial including the following: ‰ our ability to adjust production capacity in a timely fashion in response to changes in demand for our products; ‰ the significant fixed costs of operating the facilities; ‰ factory utilization rates; ‰ our ability to qualify our facilities for new products and new technologies in a timely manner; ‰ the availability of raw materials, the impact of the volatility of commodity pricing and tariffs imposed on raw materials, including substrates, gold, platinum and high purity source materials such as gallium, aluminum, arsenic, indium, silicon, phosphorous and palladium; ‰ our manufacturing cycle times; ‰ our manufacturing yields; ‰ the political, regulatory associated with our operations; and risks international manufacturing economic ‰ potential violations by our international employees or laws international or U.S. third-party agents of relevant to foreign operations; train and manage qualified ‰ our ability to hire, production personnel; ‰ our compliance with applicable environmental and other laws and regulations; and ‰ our ability to avoid prolonged periods of down-time in our facilities for any reason. acts issues Business disruptions could harm our business, lead to a decline in revenues and increase our costs. Our worldwide operations and business could be disrupted by natural disasters, industrial accidents, cybersecurity incidents, telecommunications failures, extreme weather shortages, or water power the conditions, (including health public of actions, COVID-19 pandemic), military terrorism, political or regulatory issues and other man-made disasters or catastrophic events. Global climate change could result in certain natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms and flooding. We carry commercial property damage and business interruption insurance against various risks, with limits we deem adequate, for reimbursement for damage to our fixed assets and resulting disruption of our operations. However, the occurrence of any of these business disruptions could harm our business and result in significant losses, a decline in revenue and an increase in our costs and expenses. Any disruptions require substantial expenditures and recovery time in order to fully resume operations and could also have a material adverse effect on our operations and financial results to the extent that losses are uninsured or exceed insurance recoveries and to the extent that such disruptions adversely impact our relationships with our customers. Furthermore, even if our own operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a business disruption, natural disaster or catastrophic event, they may reduce or cancel their orders, which may adversely affect our results of operations. from these events could If we experience poor manufacturing yields, our operating results may suffer. Our products have unique designs and are fabricated using multiple semiconductor process technologies Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 that are highly complex. In many cases, our products are assembled in customized packages. Many of our products consist of multiple components in a single module and feature enhanced levels of integration and complexity. Our customers insist that our products be designed to meet their exact specifications for quality, performance and reliability. Our manufacturing yield is a combination of yields across the entire supply chain, including wafer fabrication, assembly and test yields. Defects in a single component in an assembled module product can impact the yield for the entire module, which means the adverse economic impacts of an individual defect can be multiplied many times over if we fail to discover the defect before the module is assembled. Due to the complexity of our products, we periodically experience difficulties in achieving acceptable yields and other quality issues, particularly with respect to new products. Our customers test our products once they have been assembled into their products. The number of usable products that result from our production process can fluctuate as a result of many factors, including: ‰ design errors; ‰ defects in photomasks (which are used to print circuits on a wafer); ‰ minute impurities and variations in materials used; ‰ contamination of the manufacturing environment; ‰ equipment failure or variations in the manufacturing processes; ‰ losses from broken wafers or other human error; and ‰ defects in substrates and packaging. We constantly seek to improve our manufacturing yields. Typically, for a given level of sales, when our yields improve, our gross margins improve, and when our yields decrease, our unit costs are higher, our margins are lower, and our operating results are adversely affected. Costs of product defects and deviations from required specifications include the following: ‰ writing off inventory; ‰ scrapping products that cannot be fixed; ‰ accepting returns of products that have been shipped; ‰ providing product replacements at no charge; ‰ reimbursement of direct and indirect costs incurred reworking their by our customers in recalling or products due to defects in our products; ‰ travel and personnel costs to investigate potential product quality issues and to identify or confirm the failure mechanism or root cause of product defects; and ‰ defending against litigation. These costs could be significant and could reduce our gross margins. Our reputation with customers also could be damaged as a result of product defects and quality issues, and product demand could be reduced, which could harm our business and financial results. 13 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 these products until We are subject to inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products. In order to ensure availability of our products for some of our largest end customers, we start manufacturing receiving purchase certain products in advance of orders based on forecasts provided by these customers. However, these forecasts do not represent binding purchase commitments and we do not they are recognize sales for shipped to or consumed by the customer. As a result, we incur significant inventory and manufacturing costs in advance of anticipated sales. Because demand for our products may not materialize, or may be lower than expected, manufacturing based on forecasts subjects us to heightened risks of higher inventory carrying costs, increased obsolescence and higher operating costs. These inventory risks are exacerbated through when our customers purchase indirectly contract manufacturers or hold component inventory levels greater than their consumption rate because this reduces our visibility regarding the customers’ accumulated levels of inventory. If product demand decreases or we fail to forecast demand accurately, we could be required to write off inventory, which would have a negative impact on our gross margin and other operating results. We sell certain of our products based on reference designs of platform providers, and our inability to effectively manage or maintain our evolving relationships with these companies may have an adverse effect on our business. Platform providers are typically large companies that provide system reference designs for OEMs and ODMs that include the platform provider’s baseband and other complementary products. A platform provider may own or control IP that gives it a strong market position for its baseband products for certain air interface standards, which provides it with significant influence and control over sales of RF products for these standards. Platform providers historically looked to us and our competitors to provide RF products to their customers as part of the overall system design, and we competed with other RF companies to have our products included in the platform provider’s system reference design. This market dynamic has evolved as platform providers have worked to develop more fully integrated solutions that include their own RF technologies and components. Platform providers may be in a different business from ours or we may be their customer or direct competitor. Accordingly, we must balance our interest in obtaining new business with competitive and other factors. Because platform providers control the overall system reference design, competitive RF technologies or their own RF solutions as a part of their reference design and exclude our products from competitive the design, we are at a distinct disadvantage with OEMs and ODMs that are seeking a they offer if 14 turn-key design solution, even if our products offer superior performance. This requires us to work more closely with OEMs and ODMs to secure the design of our products in their handsets and other devices. Our relationships with platform providers are complex and evolving, and the inability to effectively manage or maintain these relationships could have an adverse effect on our business, financial condition and results of operations. We operate in a very competitive industry and must continue to innovate. We compete with several companies primarily engaged in the business of designing, manufacturing and selling RF solutions, as well as suppliers of discrete integrated circuits and modules. In addition to our direct competitors, some of our largest end customers and leading platform partners also compete with us to some extent by designing and manufacturing their own products. Increased competition from any source could adversely affect our operating results through lower prices for our products, reduced demand for our products, losses of existing design slots with key customers and a corresponding reduction in our ability to and recover manufacturing costs. development, engineering Many of our existing and potential competitors have entrenched market positions, historical affiliations with OEMs, considerable internal manufacturing capacity, established IP rights and substantial technological capabilities. The semiconductor industry has experienced increased industry consolidation over the last several years, a trend we expect to continue. Many of our existing and potential competitors may have greater technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors. financial, Industry overcapacity could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance. It is difficult to predict future demand for our products, which makes future requirements for production capacity and avoid periods of overcapacity. Fluctuations in the growth rate of industry capacity relative to the growth rate in demand for our products also can lead to overcapacity and contribute to cyclicality in the semiconductor market. estimate difficult to it trends and demand well Capacity expansion projects have long lead times and require capital commitments based on forecasted product in advance of production orders from customers. In recent years, we have made significant capital investments to expand our premium filter capacity to address forecasted future demand patterns. these capacity additions exceeded the near-term demand requirements, leading to overcapacity situations and underutilization of our manufacturing facilities. In certain cases, during periods experienced As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenues of underutilization. Underutilization of our manufacturing facilities can adversely affect our gross margin and other operating results. If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which would increase our expenses. For example, to address manufacturing overcapacity, in the third quarter of fiscal 2019 we commenced a phased closure of a SAW filter manufacturing facility in Florida and a transfer of production to our North Carolina facility, which was completed in fiscal 2020. In Texas, we have temporarily idled a BAW manufacturing facility. These actions resulted in impairment charges, accelerated depreciation and other restructuring related charges and expenses. Unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates may adversely affect our financial condition, liquidity and results of operations. We may utilize hedging strategies from time to time to mitigate the impact due to underlying exposures such as interest rates, precious metal prices, utility rates, or currency exchange rates. However, the impact from these be predicted or hedged, and there can be no assurance that our hedging strategies will be effective in minimizing risk. exposures underlying cannot always offer growth technical capabilities, or Our acquisitions and other strategic investments could fail to achieve our financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. As part of our business strategy, we expect to continue to review potential acquisitions and strategic investments that could complement our current product offerings, augment our market coverage or enhance our that may otherwise or margin improvement opportunities. In the event of future acquisitions of businesses, products or technologies, we could issue equity securities that would dilute our current stockholders’ ownership, incur substantial debt or financial obligations or assume contingent other results of liabilities. Such actions could harm our operations or the price of our common stock. Acquisitions and strategic investments also entail numerous other risks that could adversely affect our business, financial results condition, including: ‰ failure to complete a transaction in a timely manner, if at all, due to our inability to obtain required government or other approvals, IP disputes or other litigation, difficulty in obtaining financing on terms acceptable to us, or other unforeseen factors; operations and of Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 ‰ controls, processes, and procedures of an acquired business may not adequately ensure compliance with laws and regulations, and we may fail to identify compliance issues or liabilities; ‰ unanticipated costs, capital expenditures or working capital requirements; ‰ acquisition-related charges and amortization of acquired technology and other intangibles; ‰ the potential loss of key employees from a company we acquire or in which we invest; ‰ diversion of management’s attention from our business; ‰ disruption of our ongoing operations; ‰ dis-synergies or other harm to existing business relationships with suppliers and customers; ‰ losses or impairment research of and investments development from by unsuccessful companies in which we invest; ‰ failure to successfully acquired businesses, operations, products, technologies and personnel; and integrate ‰ unrealized expected synergies. Moreover, our resources are limited and our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our financial or strategic objectives. Any of these risks could have a material adverse effect on our business, results of operations, flows, particularly in the case of a large acquisition. condition, financial cash or In order to compete, we must attract, retain, and motivate key employees, and our failure to do so could harm our business and our results of operations. In order to compete effectively, we must hire and continue to develop retain qualified employees, leaders for key business units and functions, expand our presence in international locations and adapt to foreign locations and train and cultural norms of future operating motivate our employee base. Our results and success depend on keeping key technical personnel and management and expanding our sales and marketing, R&D and administrative support. We do not have employment agreements with the vast majority of our employees. We must also continue to attract qualified personnel. The competition for qualified personnel is intense, and the number of people with experience, particularly in RF engineering, integrated circuit and filter software engineering, design, and technical marketing and support, is limited. In addition, existing or new immigration laws, policies or regulations in the U.S. may limit the pool of available talent. Travel bans, difficulties obtaining travel visas and other could make it more difficult to effectively manage our international operations, operate as a global company or service our international customer base. Changes in the interpretation and application of employment- related laws to our workforce practices may also result restrictions on international 15 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 in increased operating costs and less flexibility in how we meet our changing workforce needs. We cannot be sure that we will be able to attract and retain skilled personnel in the future, which could harm our business and our results of operations. We are subject to warranty claims, product recalls and product liability. From time to time, we may be subject to warranty or product liability claims that could lead to significant expense. We may also be exposed to such claims as a result of any acquisition we may undertake in the future. Although we maintain reserves for reasonably estimable liabilities and purchase product liability insurance, we may elect to self-insure with respect to certain matters and our reserves may be inadequate to cover the uninsured portion of such claims. contain typically liability insurance is subject Product to significant deductibles, and such insurance may be unavailable or inadequate to protect against all claims. If one of our customers recalls a product containing one of our devices, we may incur significant costs and expenses, including replacement costs, direct and indirect product recall-related costs, diversion of technical and other resources and reputational harm. Our customer contracts and indemnification provisions, and in certain cases may also contain liquidated damages provisions, relating to product liabilities associated with such provisions are significant, and in some cases, including in agreements with some of our largest end customers, are potentially unlimited. Any such liabilities may greatly exceed any revenue we receive from sale of the relevant products. Costs, payments or damages incurred or paid by us in connection with warranty and product liability claims recalls could materially and adversely and product affect our financial condition and results of operations. potential warranty issues. quality The the U.S. and numerous other Changes in our effective tax rate may adversely impact our results of operations. We are subject Singapore, jurisdictions. Our effective tax rate is subject fluctuations and impacted by a number of including the following: ‰ changes in our overall profitability and the amount of profit determined to be earned and taxed in jurisdictions with differing statutory tax rates; to taxation in China, Germany, foreign to factors, ‰ the resolution of issues arising from tax audits with various tax authorities, including those described in Note 13 of the Notes to Consolidated Financial Statements; ‰ changes in the valuation of either our gross deferred tax assets or gross deferred tax liabilities; ‰ adjustments to income taxes upon finalization of various tax returns; ‰ changes purposes; ‰ changes in available tax credits; and in expenses not deductible for tax 16 ‰ changes in tax laws, domestic and foreign, or the interpretation of such tax laws, and changes in generally accepted accounting principles. Any significant increase in our rates could reduce net income for future periods. future effective tax Changes in the favorable tax status of our subsidiaries in Singapore and Costa Rica would have an adverse impact on our operating results. Our subsidiaries in Singapore and Costa Rica have been granted tax holidays that minimize our tax expense and that are expected to be effective through December 2021 and December 2027, respectively. In their efforts to deal with budget deficits, governments around the world are focusing on increasing tax revenues through increased audits and, potentially, increased tax rates for corporations. As part of this effort, governments continue to review their policies on granting tax holidays. Future changes in the status of either tax holiday could have a negative effect on our net income in future years. In 2017, The enactment of international or domestic tax legislation, or changes in regulatory guidance, may adversely impact our results of operations. reform, base-erosion efforts, and Corporate tax increased tax transparency continue to be high priorities in many tax jurisdictions in which we have business operations. the U.S. enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which included a number of changes to U.S. tax laws that impacted us, including the one-time transition tax on certain unrepatriated earnings of foreign subsidiaries (the “Transitional Repatriation Tax”) and the Global Intangible Low-Taxed Income (“GILTI”) provisions. In addition, other countries are beginning to implement their legislation international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and action plan, which aim to standardize and modernize global corporate tax policy, including changes to cross- border tax, transfer pricing documentations rules, and nexus-based Legislative changes, interpretations and guidance, and changes in prior tax rulings and decisions by tax authorities regarding treatments and positions of corporate income taxes resulting from these initiatives, could increase our effective tax rate and result in taxes we previously paid being subject to change, which may adversely impact our financial position and results of operations. practices. guidance incentive other align and tax to We are subject to risks associated with environmental, health and safety regulations and climate change. We are subject to a broad array of U.S. and foreign environmental, health and safety laws and regulations. These laws and regulations include those related to the use, transportation, storage, handling, emission, discharge and recycling or disposal of hazardous materials used in our manufacturing, assembly and testing processes. Our failure to comply with any of these existing or regulations could future laws or result in: ‰ regulatory penalties and fines; ‰ legal liabilities, including financial responsibility for are properties our if remedial measures contaminated; to secure governmental approvals; ‰ expenses required permits and ‰ reputational damage; ‰ suspension or curtailment of our manufacturing, assembly and test processes; and ‰ increased costs to acquire pollution abatement or remediation equipment or to modify our equipment, facilities or manufacturing processes to bring them into and regulations. compliance applicable laws with Existing and future environmental laws and regulations could also impact our product designs and limit or restrict the materials or components that are included in our products. In addition, many of our largest end customers require us to comply with corporate social responsibility include employment, health, safety, environmental and other legal requirements policies requirements. increases and non-compliance customer relationships and harm our business. that Compliance with operating applicable these expenses, affect adversely policies, exceed which often can our Regulations in the U.S. currently require that we determine whether certain materials used in our products, referred to as conflict minerals, originated in the Democratic Republic of the Congo or adjoining countries, or were from recycled or scrap sources. We may face challenges with government regulators and our customers and suppliers if we are unable to sufficiently make any required determination that the metals used in our products are conflict free. to procure. New climate change laws and regulations could require us to change our manufacturing processes or procure substitute raw materials that may cost more or be more difficult In addition, new restrictions on emissions of carbon dioxide or other greenhouse gases could result in increased costs for us and our suppliers. Various jurisdictions are developing other climate change-based regulations that also may increase our expenses and adversely increased affect our operating results. We expect worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations may adversely affect our business and results of operations. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Risks Related to Our International Sales and Operations We are subject to risks from international sales and operations. We operate globally with sales offices and R&D activities as well as manufacturing, assembly and test facilities in multiple countries, and some of our business activities are concentrated in Asia. As a result, we are subject to regulatory, geopolitical and other risks associated with doing business outside the U.S., including: ‰ global and local economic, social and political conditions and uncertainty; ‰ currency controls and fluctuations; ‰ formal or informal doing-business sanctions, tariffs and other related restrictions; imposition of export, import or trade ‰ labor market conditions and workers’ rights affecting those of our our manufacturing operations or customers or suppliers; regulations, including ‰ disruptions in commodities trading markets; capital and securities and ‰ occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability, which may disrupt manufacturing, assembly, logistics, security and communications and result in reduced demand for our products; ‰ compliance with laws and regulations that differ among jurisdictions, including those covering taxes, intellectual property ownership and infringement, imports and exports, anti-corruption and anti-bribery, antitrust and data environment, health, and safety; and ‰ pandemics and similar major health concerns, including COVID-19, which could adversely affect our business and our customer order patterns. competition, privacy, and to customers located outside the U.S. Sales accounted for approximately 59% of our revenue in fiscal 2021, of which approximately 39% was attributable to sales to customers located in China. We expect that revenue from international sales to China and other markets will continue to be a significant part of our total revenue. Any weakness in the Chinese economy could result in a decrease in demand for consumer products that contain our products, which could materially and adversely affect our business. The imposition by the U.S. of tariffs on goods countermeasures from China, imposed by China in response, U.S. export restrictions on sales of products to China and other government actions that restrict or otherwise adversely affect our ability to sell our products to Chinese customers may have a material impact on our business, including our ability to sell products and to manufacture or source components. imported As a global company, our results are affected by movements in currency exchange rates. Our exposure may increase or decrease over time as our foreign 17 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 international business levels fluctuate in the countries where we have operations, and these changes could have a material impact on our financial results. The functional currency for most of our international operations is the U.S. dollar. We have foreign operations in Asia, Europe and Central America, and a substantial portion of our revenue is derived from sales to customers outside the U.S. Our revenue is primarily denominated in U.S. dollars. Operating expenses and items related to our foreign- certain working capital instances, in are, operations based denominated in the local foreign currencies and therefore are affected by changes in the U.S. dollar exchange rate in relation to foreign currencies, such as the Costa Rican Colon, Euro, Pound Sterling, Renminbi and Singapore Dollar. the U.S. dollar weakens compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. some If Economic regulation in China could adversely impact our business and results of operations. We have a significant portion of our assembly and testing capacity in China. For many years, the Chinese economy has experienced periods of rapid growth and wide fluctuations in the rate of inflation. In response to these factors, the Chinese government has, from time to time, adopted measures to regulate growth and to contain inflation, including currency controls and measures designed to restrict credit, control prices or set currency exchange rates. Such actions in the future, as well as other changes in Chinese laws including actions in furtherance of and regulations, China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, the emergence of Chinese-based competitors, decrease the demand for our products in China, or reduce the supply of critical materials for our products, which could have a material adverse effect on our business and results of operations. foster Changes in government trade policies, including the imposition of tariffs and export restrictions, have limited and could continue to limit our ability to sell or provide our products and other items to certain customers and suppliers, which may materially adversely affect our sales and results of operations. The U.S. or foreign governments have taken and may continue or regulatory action that could materially interfere with our ability to export, reexport, and transfer products and other items in certain countries, particularly in China. For example, the imposition of tariffs has not had a direct, material adverse impact on our business; however, the direct and indirect effects of tariffs and other restrictive trade actions are difficult to measure and are only one part of economic and trade policy. administrative, legislative take to Furthermore, we have experienced and may continue to experience restrictions on our ability to export, reexport, and transfer our products and other items to 18 that banned certain foreign customers and suppliers where exports, transfers of products require export reexports, or licenses or are prohibited by government action. The imposed export U.S. government has in the past restrictions American effectively companies from exporting, reexporting, and transferring products to ZTE Corporation, one of our customers. In May 2019, the Bureau of Industry and Security of the U.S. Department of Commerce (“Commerce”) added Huawei Technologies Co., Ltd. and over 100 of its affiliates to the “Entity List” maintained by Commerce, which caused us to temporarily suspend the export, reexport, and transfer of products to Huawei. In August 2020, Commerce issued a final rule adding additional Huawei non-U.S. affiliates to the Entity List, confirming the expiration of a temporary general license applicable to Huawei, and amending the foreign-produced direct product rule in a manner that represents a significant expansion of its application to Huawei. Huawei accounted for less than 5% of total revenue in fiscal 2021 and 10% of total revenue in fiscal 2020. While we were able to ship certain products to Huawei in fiscal years 2021 and 2020, trade restrictions and our ability to secure any required licenses will continue to impact sales to Huawei. continuing export Even if such restrictions are lifted, any financial or other penalties or restrictions imposed on Huawei could have a continuing negative impact on our future revenue and results of operations. In addition, Huawei or other foreign customers or suppliers affected by future U.S. government sanctions or threats of sanctions may respond by developing their own solutions to replace our products or by adopting our foreign competitors’ solutions. to tariffs or other We cannot predict what further actions may ultimately be taken with respect trade measures between the U.S. and China or other countries, what products or entities may be subject to such actions, or what actions may be taken by other countries in response. The loss of foreign customers or suppliers or the imposition of restrictions on our ability to sell or transfer products to such customers or suppliers as a result of tariffs, export restrictions or other U.S. could materially adversely affect our sales, business and results of operations. regulatory actions Risks Related to Our Indebtedness We may not be able to generate sufficient cash to service all of our debt, including our senior notes due 2029 and 2031, respectively, or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us. On September 29, 2020, we entered into a five-year unsecured senior credit facility pursuant to a credit agreement with as administrative agent, swing line lender and L/C issuer, America, N.A., Bank of and a syndicate of lenders (the “2020 Credit Agreement”). The Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017. The Credit Agreement includes a senior term loan (the “2020 Term Loan”) of up to $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”). In September 2019, December 2019 and June 2020, we issued $350.0 million, $200.0 million and $300.0 million, respectively, aggregate principal amount of 4.375% senior notes due 2029 (the “2029 Notes”) pursuant to an indenture dated as of September 30, 2019 (as supplemented, the “2019 issued Indenture”). $700.0 million aggregate principal amount of 3.375% senior notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”) pursuant to an indenture dated as of September 29, 2020 (the “2020 Indenture,” and together with the 2019 Indenture, the “Indentures”). 2020, we September In to Our ability to make scheduled payments on or including the 2020 refinance our debt obligations, Term Loan and the Notes, and to fund working capital, planned capital expenditures and expansion efforts and any strategic alliances or acquisitions we may make in the future depends on our ability to generate cash in the future and on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot be sure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay our debt, including the 2020 Term Loan and the Notes. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may face liquidity issues and be forced to capital expenditures, or to sell assets, seek additional capital or restructure or refinance our debt. These alternative measures may not be successful and may not permit us to meet our scheduled debt service and other obligations. Additionally, the 2020 Credit Agreement and the Indentures limit the use of the proceeds from any disposition; as a result, we may not be allowed under these documents to use proceeds from such dispositions to satisfy our debt service obligations. Further, we may need to refinance all or a portion of our debt at or before maturity, and we cannot be sure that we will be able to refinance any of our debt on commercially reasonable terms or at all. investments reduce delay and or The agreements and instruments governing our debt impose restrictions that may limit our operating and financial flexibility. The Credit Agreement governing the Revolving Facility and the Term Loan and the Indentures governing the Notes contain a number of significant restrictions and covenants that limit our ability to: ‰ incur additional debt; Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 ‰ pay dividends, make other distributions or repurchase or redeem our capital stock; ‰ prepay, redeem or repurchase certain debt; ‰ make loans and investments; ‰ sell, transfer or otherwise dispose of assets; ‰ incur or permit to exist certain liens; ‰ enter into certain types of transactions with affiliates; ‰ enter into agreements restricting our subsidiaries’ ability to pay dividends; and ‰ consolidate, amalgamate, merge or sell all or substantially all of our assets. including a significant These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the markets in which we compete. In addition, the 2020 Credit Agreement requires us to comply with certain financial maintenance covenants. Operating results below current levels or other adverse increase in interest factors, rates, could result in our being unable to comply with the financial covenants contained in the Revolving Facility. If we violate covenants under the 2020 Credit Agreement and are unable to obtain a waiver from our lenders, our debt under the Revolving Facility would be in default and could be accelerated by our lenders. Because of cross-default provisions in the agreements and instruments governing our debt, a default under one agreement or instrument could result in a default under, and the acceleration of, our other debt. If our debt is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on terms that are commercially reasonable terms, or acceptable to us. If our debt is in default for any reason, our business, financial condition and results of operations could be materially and adversely affected. In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of the notes and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions. Risks Related to Information Technology and Data Privacy We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties. We rely on a combination of patents, trademarks, laws, confidentiality procedures and trade secret licensing arrangements to protect our intellectual property rights. We cannot be certain that patents will be issued from any of our pending applications or that patents will be issued in all countries where our products can be sold. Further, we cannot be certain that any claims allowed from pending applications will be of sufficient scope or strength to provide meaningful protection against our competitors. Our competitors may also be able to design around our patents. 19 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 The laws of some countries in which our products are developed, manufactured or sold may not protect our products or intellectual property rights to the same extent as U.S. laws. This increases the possibility of misappropriation or infringement of our technology and products. Although we intend to vigorously defend our intellectual property rights, we may not be able to technology. prevent misappropriation Additionally, to able independently develop non-infringing technologies that are substantially equivalent or superior to ours. competitors may our our be of intellectual property We may need to engage in legal actions to enforce or defend our rights. Generally, intellectual property litigation is both expensive and unpredictable. Our involvement in intellectual property litigation could divert the attention of our management and technical personnel and have a material, adverse effect on our business. We may be subject to claims of infringement of third- party intellectual property rights. Our operating results may be adversely affected if third parties were to assert claims that our products infringed their patent, copyright or other intellectual property rights. Such assertions could lead to expensive and unpredictable litigation, diverting the attention of management and technical personnel. An unsuccessful result in any such litigation could have adverse effects on our business, which may include injunctions, exclusion orders and royalty payments to third parties. In addition, if one of our customers or another supplier to one of our customers were found to be infringing on third-party intellectual property rights, such a finding could adversely affect the demand for our products. Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer. We rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities to provide us with competitive advantages. We protect into confidentiality this agreements with consultants, strategic partners and other third parties. We also design our computer systems and networks and implement various procedures to restrict unauthorized access to dissemination of our proprietary information. information by entering employees, our We face internal and external data security threats. Current, departing or former employees or third parties could attempt to improperly use or access our computer systems and networks to copy, obtain or misappropriate or otherwise interrupt our business. Like others, we are to significant system or network also subject including disruptions from numerous computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. information proprietary causes, our 20 Security breaches, computer malware, phishing, spoofing, and other cyber-attacks have become more prevalent and sophisticated in recent years. While we defend against these threats on a daily basis, we do not believe that such attacks to date have caused us any material damage. Because the techniques used by computer hackers and others to access or sabotage networks constantly evolve and generally are not recognized until launched against a target, we may be unable to anticipate, counter or ameliorate all of these techniques. As a result, our and our customers’ proprietary information may be misappropriated and the impact of any future incident cannot be predicted. loss of such information could harm our Any in a loss of customer competitive position, confidence in the adequacy of our threat mitigation and detection processes and procedures, cause us to incur significant costs to remedy the damages caused by the incident, and divert management and other resources. We routinely implement improvements to our network security safeguards and we are devoting increasing resources to the security of our information technology systems. We cannot, however, assure that to such system improvements will be sufficient prevent or limit the damage from any future cyber- attack or network disruptions. result The costs related to cyber-attacks or other security threats or computer systems disruptions typically would not be fully insured or indemnified by others. Occurrence of any of the events described above could result in loss of competitive advantages derived from our R&D efforts or our IP. Moreover, these events may in the early obsolescence of our products, result product development delays, or diversion of the information attention technology otherwise adversely affect our internal operations and reputation or degrade our financial results and stock price. and resources, of management other and key or We may be subject to theft, loss, or misuse of personal data by or about our employees, customers or other third parties, which could increase our expenses, damage our reputation, or result in legal or regulatory proceedings. In the ordinary course of our business, we have access to sensitive, confidential or personal data or information regarding our employees and others that is subject to privacy and security laws and regulations. The theft, loss, or misuse of personal data collected, used, stored, or transferred by us to run our business, including or by our business process software applications providers and other vendors that have access to sensitive data, could result in damage to our reputation, disruption of increased our business and security costs or costs related to defending legal claims. third-party service providers, significantly activities, business Global privacy legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment. For In addition, example, the European Union has adopted the General Data Protection Regulation (“GDPR”), which requires companies to comply with rules regarding the handling of personal data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. Failure to meet GDPR requirements could result in penalties of up to 4% of worldwide the revenue. interpretation and application of consumer and data protection laws in the U.S., Europe and elsewhere are often uncertain and fluid, and may be interpreted and applied in a manner that is inconsistent with our data practices. Complying with these changing laws has caused, and could continue to cause, us to incur substantial costs, which could have an adverse effect on our business and results of operations. Further, failure to comply with existing or new rules may result in significant penalties or orders to stop the alleged non-compliant activity. Finally, even our inadvertent failure to comply with federal, state, or international privacy-related or data protection laws and regulations could or proceedings against us by governmental entities or others. regulatory inquiries audits, result in Risks Related to Owning our Common Stock Our certificate of incorporation and bylaws and the General Corporation Law of the State of Delaware may discourage takeovers and business combinations that our stockholders might consider to be in their best interests. Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying, deterring, preventing or rendering more difficult, a change in control of Qorvo that our stockholders might consider to be in their best interests. These provisions include: ‰ granting to the board of directors sole power to set the number of directors and fill any vacancy on the board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; ‰ the ability of the board of directors to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the board of directors; ‰ the inability of stockholders to call special meetings of stockholders; ‰ establishment of advance notice requirements for stockholder proposals and nominations for election to the board of directors at stockholder meetings; and ‰ the inability of stockholders to act by written consent. In addition, the General Corporation Law of the State regulate of Delaware provisions contains that Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 “business combinations” between corporations and interested stockholders who own 15% or more of the corporation’s voting stock, except under certain circumstances. also discourage potential acquisition proposals and delay or prevent a change in control. provisions These could These provisions may prevent our stockholders from receiving the benefit of any premium to the market price of our common stock offered by a bidder in a takeover context and may also make it more difficult for a third party to replace directors on our board of directors. Further, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future. be The price of our common stock has recently been and may in the future be volatile. The price of our common stock, which is traded on the Nasdaq Global Select Market, has been and may continue to wide to fluctuations. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. Some of the factors that could cause fluctuations in the stock price or trading volume of our common stock include: ‰ general market economic subject volatile and and including market and political conditions in the conditions, semiconductor industry; ‰ actual or expected variations in quarterly operating results; ‰ pandemics and similar major health concerns, including the COVID-19 pandemic; ‰ differences between actual operating results and those expected by investors and analysts; ‰ changes in recommendations by securities analysts; ‰ operations and stock performance of competitors and major customers; ‰ accounting charges, including charges relating to the impairment of goodwill and restructuring; ‰ significant acquisitions, strategic alliances, capital commitments, or new products announced by us or by our competitors; ‰ sales of our common stock, including sales by our directors and officers or significant investors; ‰ repurchases of our common stock; ‰ recruitment or departure of key personnel; and ‰ loss of key customers. We cannot assure that the price of our common stock will not fluctuate or decline significantly in the future. In addition, can experience considerable price and volume fluctuations that are unrelated to our performance. the stock market in general ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 21 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 ITEM 2. PROPERTIES. Our corporate headquarters (leased) and our MP headquarters (owned) are in Greensboro, North Carolina, and our IDP headquarters (owned) is in Richardson, Texas. The following table sets forth our primary production facilities as of April 3, 2021: Location Greensboro, North Carolina Hillsboro, Oregon Richardson, Texas Beijing, China (1) Dezhou, China Heredia, Costa Rica Nuremberg, Germany Owned/Leased Primary Function Owned Owned Owned Owned Leased Owned Leased Wafer fabrication Wafer fabrication Wafer fabrication, assembly and test Module assembly and test Module assembly and test Filter assembly and test Packaging and test (1) We hold land-use rights for the land associated with this property. Our wafer fabrication facility (owned) in Farmers Branch, Texas, has been idled, and the wafer fabrication operations in our Apopka, Florida facility (owned) were consolidated into our Greensboro, North Carolina facility during fiscal 2020. The Apopka, Florida facility is currently used by Qorvo as a research and development center. We believe our properties have been well-maintained, are in sound operating condition and contain all equipment and facilities necessary to operate at present levels. While we believe all our facilities are suitable and adequate for our present purposes, we continually evaluate our business and facilities and may decide to expand, add or dispose of facilities in the future. The majority of our production facilities are shared by our operating segments. ITEM 3. LEGAL PROCEEDINGS. See the information under the heading “Legal Matters” in Note 11 of the Notes to Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the Nasdaq Global Select Market under the symbol “QRVO.” As of May 13, 2021, there were 659 holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization). We have never declared or paid any dividends on our common stock. We currently intend to retain any future earnings to invest in the growth and operation of our business and do not intend to pay any dividends for the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors. 22 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 PERFORMANCE GRAPH COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Qorvo, Inc., the NASDAQ Composite lndex, the S&P 500 Index and the NASDAQ Electronic Components Index $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 4/2/16 4/1/17 3/31/18 3/30/19 3/28/20 4/3/21 Qorvo, Inc. S&P 500 NASDAQ Composite NASDAQ Electronic Components *$100 invested on 4/2/16 in stock or 3/31/16 index, including reinvestment of dividends. Indexes calculated on month-end basis. Copyright© 2021 Standard & Poor’s, a division of S&P Global. All rights reserved. Qorvo, Inc. Nasdaq Composite S&P 500 Nasdaq Electronic Components April 2, 2016 April 1, 2017 $100.00 $134.91 $100.00 $122.88 $100.00 $117.17 $100.00 $143.46 March 31, 2018 $138.63 $148.39 $133.57 $196.39 March 30, 2019 $141.15 $164.16 $146.25 $196.51 March 28, 2020 $158.78 $165.30 $136.05 $205.57 April 3, 2021 $379.57 $286.63 $212.71 $390.06 Notes: A. The index level for all series assumes that $100.00 was invested in our common stock and each index on April 2, 2016. B. The lines represent monthly index levels derived from compounded daily returns, assuming reinvestment of all dividends. C. The indexes are reweighted daily using the market capitalization on the previous trading day. D. If the month end is not a trading day, the preceding trading day is used. 23 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Issuer Purchases of Equity Securities Period January 3, 2021 to January 30, 2021 January 31, 2021 to February 27, 2021 February 28, 2021 to April 3, 2021 Total number of shares purchased (in thousands) 70 503 437 Average price paid per share $176.85 $173.37 $172.77 Total number of shares purchased as part of publicly announced plans or programs (in thousands) 70 503 437 Approximate dollar value of shares that may yet be purchased under the plans or programs $413.6 million $326.3 million $250.8 million Total 1,010 $173.35 1,010 $250.8 million On October 31, 2019, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of our outstanding common stock, which included approximately $117.0 million authorized under the prior program which was terminated concurrent with this authorization. Under this program, share repurchases were made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The number and timing of shares repurchased depended on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The program did not require us to repurchase a minimum number of shares and did not have a fixed term. On May 5, 2021, we announced that our Board of Directors authorized a new share repurchase program. See Note 16 and Note 18 of the Notes to Consolidated Financial Statements for further discussion of our share repurchase program. ITEM 6. SELECTED FINANCIAL DATA. Not applicable. 24 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our including audited consolidated financial statements, the notes thereto, set forth in Part II, Item 8 of this report. OVERVIEW Company Qorvo® is a leader in the development and commercialization of technologies and products for wireless and wired connectivity. We combine highly differentiated technologies, systems-level expertise and manufacturing scale to serve a diverse set of customers a broad portfolio of innovative solutions that enable a more connected world. The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry. During fiscal 2021, we did not encounter material disruptions to our global supply chain or operations, and we believe that our cash on hand, cash flow from operations and availability under our revolving credit facility provide us with sufficient liquidity. The duration, severity and future impact of the COVID-19 pandemic remains uncertain and may result in significant disruptions to our operations, including our supply chain, and may negatively impact our financial condition. We will continue to monitor the implications of the COVID-19 pandemic on our business, as well as on our customers’ and suppliers’ businesses. As always, we are committed to protecting the health and safety of our employees in all locations. We facilities implemented multiple protocols in our worldwide, including increased cleaning and sanitation procedures, pre-shift temperature screenings, and enhanced use of personal protective equipment. In addition, we have taken steps to effectively implement social distancing, including rotating shifts and remote- work options whenever possible. Business Segments We design, develop, manufacture and market our products to U.S. and international OEMs and ODMs in two operating segments, which are also our reportable segments: Mobile Products (“MP”) and Infrastructure and Defense Products (“IDP”). MP is a global supplier of cellular, UWB and Wi-Fi solutions for a variety of applications, including smartphones, wearables, laptops, tablets and IoT. IDP is a global supplier of RF, SoC and power management solutions for applications in wireless infrastructure, defense, Wi-Fi, smart home, automotive and IoT. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 on are based business segments These the organizational structure and information reviewed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”) and are managed separately based on the end markets and applications they support. The CODM allocates resources and evaluates the performance of each reportable segment primarily based on operating income. For financial information about reportable operating segments for each of the last three fiscal years, refer to Note 17 of the Notes to Consolidated Financial Statements. the results of our Fiscal 2021 Financial Highlights ‰ Revenue increased 24.0% in fiscal 2021 to $4,015.3 million, compared to $3,239.1 million in fiscal 2020, driven primarily by higher demand for our 5G mobile solutions, 5G base station products and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei. ‰ Gross margin for fiscal 2021 was 46.9%, compared to 40.8% in fiscal 2020, primarily due to increased volume, improved mix, and higher factory utilization associated with the ramp of 5G, Wi-Fi 6, and other products. Productivity and lower inventory charges also contributed to gross margin expansion, partially offset by more moderate price effects. ‰ Operating income was $906.6 million in fiscal 2021, compared to $423.2 million in fiscal 2020. This increase was primarily due to higher revenue and higher gross margin, partially offset by higher operating expenses. Operating expenses increased costs and primarily due to higher personnel increased product development spend, partially offset by lower acquisition and integration related expenses and lower travel expense. ‰ Net income per diluted share was $6.32 for fiscal 2021, compared to net income per diluted share of $2.80 for fiscal 2020. ‰ Cash flow from operations was $1,301.9 million for fiscal 2021, compared to $945.6 million for fiscal 2020. This year-over-year increase was primarily due to increased profitability, partially offset by changes in working capital driven by accounts receivable. ‰ Capital expenditures were $187.0 million in fiscal 2021, compared to $164.1 million in fiscal 2020. Our capital expenditures in fiscal 2021 included investments in premium filter capacity. ‰ We completed the acquisition of 7Hugs Labs S.A.S. of a total of including purchase cash price acquired (“7Hugs”) for $48.7 million, $1.0 million. ‰ We issued an additional $300.0 million aggregate principal amount of the 2029 Notes. ‰ We issued $700.0 million aggregate principal amount of the 2031 Notes. ‰ We entered into a five-year unsecured credit facility, which includes a senior term loan (the “2020 Term Loan”) of up to $200.0 million. On the closing date, 25 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 we drew the full amount of the 2020 Term Loan and concurrently repaid the $97.5 million remaining principal balance of the term loan under a previous credit facility. ‰ We redeemed all of our 5.50% senior notes due July 15, 2026 (the “2026 Notes”) at a redemption price equal the $900.0 million outstanding principal amount, plus accrued and unpaid interest. In connection with the redemption, we recognized a loss on debt extinguishment of $61.0 million. to 106.363% of price equal ‰ We redeemed the remaining 7.00% senior notes due December 1, 2025 (the “2025 Notes”) at a redemption the $23.4 million outstanding principal amount, plus accrued and unpaid interest. In connection with the debt recognized redemption, we extinguishment of $1.0 million. to 103.50% of ‰ We repurchased approximately 3.6 million shares of our common stock for approximately $515.1 million. loss on a RESULTS OF OPERATIONS Consolidated The table below presents a summary of our results of operations for fiscal years 2021 and 2020 along with a year- over-year comparison. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended March 28, 2020, filed with the SEC on May 20, 2020, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended March 30, 2019 along with a year-over-year comparison between fiscal years 2020 and 2019. (In thousands, except percentages) Revenue Cost of goods sold Gross profit Research and development Selling, general and administrative Other operating expense Fiscal 2021 Fiscal 2020 Increase (Decrease) Dollars % of Revenue Dollars % of Revenue Dollars Percentage Change $4,015,307 2,131,741 100.0% $3,239,141 1,917,378 53.1 100.0% $776,166 214,363 59.2 1,883,566 570,395 367,238 39,306 46.9 14.2 9.1 1.0 1,321,763 484,414 343,569 70,564 40.8 14.9 10.6 2.2 561,803 85,981 23,669 (31,258) 24.0% 11.2 42.5 17.7 6.9 (44.3) Operating income $ 906,627 22.6% $ 423,216 13.1% $483,411 114.2% REVENUE Revenue increased primarily due to higher demand for our 5G mobile solutions, 5G base station products and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei. sales through to multiple We provided our products to our largest end customer contract (Apple) manufacturers, which in the aggregate accounted for 30% and 33% of total revenue in fiscal years 2021 and 2020, respectively. Huawei accounted for less than 5% of total revenue in fiscal 2021 and 10% of total revenue in fiscal 2020. These customers primarily purchase RF solutions for a variety of mobile devices. See Note 2 of the Notes to Consolidated Financial Statements for further information. In May 2019, the Bureau of Industry and Security of the U.S. Department of Commerce (“Commerce”) added Huawei Technologies Co., Ltd. and over 100 of its affiliates to the Entity List maintained by Commerce, which caused us to temporarily suspend the export, reexport, and transfer of products to Huawei. In August 2020, Commerce issued a final rule adding additional Huawei non-U.S. affiliates to the Entity List, confirming the expiration of a temporary 26 general license applicable to Huawei, and amending the foreign-produced direct product rule in a manner its represents a significant expansion of that application to Huawei. While we were able to ship certain products to Huawei in fiscal years 2021 and 2020, trade restrictions and our ability to secure any required licenses will continue to impact sales to Huawei. International shipments amounted to $2,384.2 million in fiscal 2021 (approximately 59% of revenue) compared to $1,770.8 million in fiscal 2020 (approximately 55% of revenue). Shipments to Asia totaled $2,191.2 million in fiscal 2021 (approximately 55% of revenue) compared to $1,616.4 million in fiscal 2020 (approximately 50% of revenue). GROSS MARGIN Gross margin increased primarily due to increased volume, improved mix, and higher factory utilization associated with the ramp of 5G, Wi-Fi 6, and other products. Productivity and lower inventory charges also contributed to gross margin expansion, partially offset by more moderate price effects. OPERATING EXPENSES Research and Development R&D spending increased primarily due to higher personnel costs and increased product development spend, partially offset by lower travel expense. Selling, General and Administrative Selling, general and administrative expense increased primarily due to higher personnel and commission expenses, partially offset by lower travel expense and lower intangible amortization expense. Other Operating Expense In fiscal 2021, we recognized $27.3 million of post- combination compensation expense as well as other In fiscal acquisition and integration related costs. Operating Segments Mobile Products (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 2021, we also recorded restructuring related charges of $2.7 million related to employee termination benefits and other exit costs as a result of restructuring actions. In fiscal 2020, we recognized $50.9 million of post- combination compensation expense as well as other acquisition and integration related costs. In fiscal 2020, we also recorded restructuring related charges of $13.4 million related to employee termination costs as a result of benefits and other exit restructuring actions. See Note 5 of the Notes to Consolidated Financial Statements for information on business acquisitions the Notes to Consolidated and see Note 12 of Financial Statements for information on restructuring actions. Fiscal Year Increase 2021 2020 Dollars Percentage Change $2,856,813 $2,397,740 715,514 1,008,171 $459,073 292,657 19.1% 40.9 35.3% 29.8% MP revenue increased primarily due to higher demand for our 5G mobile solutions and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei. MP operating income increased primarily due to increased volume, improved mix, and higher factory utilization and productivity associated with the ramp of 5G mobile solutions and Wi-Fi products, partially offset by more moderate price effects and higher operating expenses. Operating expenses increased primarily due to higher personnel costs and increased product development spend, partially offset by lower travel expense. Infrastructure and Defense Products (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Fiscal Year Increase 2021 2020 Dollars Percentage Change $1,158,494 283,507 $841,401 145,295 $317,093 138,212 37.7% 95.1 24.5% 17.3% IDP revenue increased primarily due to higher demand for our 5G base station products, Wi-Fi products and defense and aerospace products. IDP operating income increased primarily due to increased revenue, higher factory utilization and lower inventory adjustments, partially offset by unfavorable changes in product mix and increased operating expenses. Operating expenses increased primarily due to higher personnel costs and increased product development spend, partially offset by lower travel expense. See Note 17 of the Notes to Consolidated Financial Statements for a reconciliation of segment operating income to the consolidated operating income for fiscal years 2021, 2020 and 2019. 27 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 INTEREST, OTHER (EXPENSE) INCOME AND INCOME TAXES (In thousands) Interest expense Other (expense) income, net Income tax expense Fiscal Year 2021 2020 $(75,198) $(60,392) 32,265 (60,764) (24,049) (73,769) Interest expense We recognized $79.3 million of interest expense in fiscal 2021 primarily related to the 2026 Notes, the 2029 Notes and the 2031 Notes. We recognized interest expense in fiscal 2020 $66.0 million of primarily related to the 2026 Notes and the 2029 Notes. Interest expense in the preceding table for fiscal years 2021 and 2020 is net of capitalized interest of $4.1 million and $5.6 million, respectively. Other (expense) income, net During fiscal 2021, we recognized a loss on debt extinguishment of $62.0 million. See Note 9 of the Notes to Consolidated Financial Statements for information regarding our debt extinguishment activity. During fiscal 2021, we recorded $21.5 million of income based on our share of the earnings from our equity method investments. a gain recorded fiscal 2020, we During of $43.0 million related to the remeasurement of our previously held equity interest in Cavendish Kinetics Limited (“Cavendish”) in connection with our purchase of the remaining issued and outstanding capital of the the Notes to Consolidated entity. See Note 5 of Financial Statements information for regarding the Cavendish acquisition. During fiscal 2020, we recorded an impairment of $18.3 million on an equity investment without a readily determinable fair value. See Note 7 of the Notes to Consolidated Financial Statements for information regarding our investments. additional Income tax expense Income tax expense for fiscal 2021 was $73.8 million. This was primarily comprised of tax expense related to domestic and international operations generating pre-tax book income, the impact of the Tax Act’s GILTI provisions, taxes on certain foreign earnings which are not permanently reinvested, and an increase in gross unrecognized tax benefits, offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits. For fiscal 2021, this resulted in an annual effective tax rate of 9.1%. Income tax expense for fiscal 2020 was $60.8 million. This was primarily comprised of tax expense related to international operations generating pre-tax book income, the impact of the Tax Act’s GILTI provisions, the reversal of the permanent reinvestment assertion 28 with regards to certain unrepatriated foreign earnings, and an increase in gross unrecognized tax benefits, related to international offset by a tax benefit operations losses and generating pre-tax book domestic tax credits. For fiscal 2020, this resulted in an annual effective tax rate of 15.4%. A valuation allowance has been established against deferred tax assets in the taxing jurisdictions where, based upon the positive and negative evidence available, it is more likely than not that the related deferred tax assets will not be realized. Realization is dependent upon generating future income in the taxing jurisdictions in which the operating loss carryovers, credit carryovers, depreciable tax basis, and other deferred tax assets exist. Management reevaluates the ability to realize the benefit of these deferred tax assets on a quarterly basis. As of the end of fiscal years 2021 and 2020, the valuation allowance against domestic and foreign deferred tax assets was $36.5 million and $35.3 million, respectively. See Note 13 of the Notes to Consolidated Financial Statements regarding income taxes. information additional for STOCK-BASED COMPENSATION Financial Standards Under Board Accounting Accounting Standards Codification (“ASC”) 718, “Compensation – Stock Compensation,” stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award using for stock options (Black- an option pricing model Scholes) and market price for restricted stock units, and is recognized as expense over the employee’s requisite service period. total remaining unearned As of April 3, 2021, compensation cost related to unvested restricted stock units was $103.7 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. LIQUIDITY AND CAPITAL RESOURCES Cash generated by operations is our primary source of liquidity. As of April 3, 2021, we had working capital of approximately including $1,397.9 million in cash and cash equivalents, compared to working capital of $1,151.5 million, including $714.9 million in cash and cash equivalents, as of March 28, 2020. $1,802.2 million, of as total 3, cash and cash Our $1,397.9 million of equivalents includes 2021, April approximately $1,070.3 million held by our foreign subsidiaries, of which $954.8 million is held by Qorvo International the undistributed earnings of our foreign subsidiaries are needed in the U.S., we may be required to pay state foreign local withholding taxes to income and/or repatriate these earnings. Singapore. Pte. Ltd. in If At this time, we are not able to estimate the long-term impact of the COVID-19 pandemic on our business, financial condition, results of operations, and/or cash flow. We believe we have sufficient liquidity available from operating cash flow, cash on hand, and availability under our revolving credit facility. However, as the situation continues to evolve, we will assess our liquidity needs, evaluate available alternatives and take appropriate actions. Credit Agreement On September 29, 2020, we and certain of our U.S. subsidiaries (the “Guarantors”) entered into a five-year unsecured senior credit facility pursuant to a credit agreement (the “2020 Credit Agreement”) with Bank of America, N.A. acting as administrative agent and a syndicate of lenders. The 2020 Credit Agreement amended and restated our previous credit agreement dated as of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement includes the 2020 Term Loan and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”). During fiscal 2021, we made principal payments totaling $2.5 million on the term loan under the 2017 Credit Agreement (the “2017 Term Loan”). On the closing date of the 2020 Credit Agreement, we repaid the remaining principal balance of $97.5 million on the 2017 Term Loan drew $200.0 million under the 2020 Term Loan. concurrently and During fiscal 2021, we made principal payments totaling $2.5 million on the 2020 Term Loan. Interest paid on the 2017 Term Loan and 2020 Term Loan during fiscal years 2021 and 2020 was $2.1 million and $2.4 million, respectively. to the 2020 Credit Agreement, we may Pursuant request one or more additional tranches of term loans or increases to the Revolving Facility, up to an aggregate of $500.0 million and subject to securing additional funding commitments from the existing or includes a new lenders. The Revolving Facility $25.0 million sublimit for the issuance of standby letters of credit and a $10.0 million sublimit for swing line loans. The Credit Facility is available to finance working capital, capital expenditures and other general corporate purposes. Outstanding amounts are due in full on the maturity date of September 29, 2025, subject to scheduled amortization of the 2020 Term Loan principal prior to the maturity date as set forth in the 2020 Credit Agreement. During fiscal 2021, there were no borrowings under the Revolving Facility. See Note 9 of the Notes to Consolidated Financial Statements for further information about the Credit rates and including applicable interest Agreement, financial covenants. As of April 3, 2021, we were in compliance with all the financial covenants under the Credit Agreement. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 was which stock, included terminated Stock Repurchases On October 31, 2019, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of our outstanding approximately common the prior program $117.0 million authorized under which this with authorization. Under this program, share repurchases were made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The number and timing of shares repurchased depended on general market conditions, regulatory investment opportunities and other considerations. The program did not require us to repurchase a minimum number of shares and did not have a fixed term. requirements, concurrent alternative We repurchased 3.6 million shares, 6.4 million shares and 9.1 million shares of our common stock during fiscal years 2021, 2020 and 2019, respectively, at an aggregate cost of $515.1 million, $515.1 million and $638.1 million, respectively. On May 5, 2021, we announced that our Board of Directors authorized a new share repurchase program. See Note 18 of the Notes to Consolidated Financial Statements for further discussion of our new repurchase program. Cash Flows from Operating Activities Operating activities in fiscal 2021 generated cash of $1,301.9 million, compared to $945.6 million in fiscal 2020, primarily due to increased profitability, partially offset by changes in working capital driven by accounts receivable. Cash Flows from Investing Activities Net cash used in investing activities in fiscal 2021 was $218.7 million, compared to $1,105.7 million in fiscal 2020. During fiscal 2021, we acquired 7Hugs for $47.7 million and during fiscal 2020, we acquired Active-Semi Inc., Cavendish, Custom MMIC and Decawave Limited, which resulted in net cash outflows of $946.0 million. See Note 5 of the Notes to Consolidated Financial Statements for further information. International, Cash Flows from Financing Activities Net cash used in financing activities in fiscal 2021 was $401.9 million, compared to net cash provided by financing activities of $165.6 million in fiscal 2020. This decrease in cash flows was due primarily to our debt financing activity. See Note 9 of the Notes to further Consolidated information. Statements Financial for Our future capital requirements may differ materially from those currently anticipated and will depend on including market acceptance of and many factors, demand for our products, acquisition opportunities, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flow from operations, coupled with our existing cash and cash equivalents and our 29 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Credit Facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if there is a significant decrease in demand for our products, or if our revenue grows faster than we anticipate, operating cash flows If existing may be insufficient to meet our needs. resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. Additional equity or debt financing could be dilutive to holders of our common stock. Further, we cannot be sure that additional equity or debt financing, if required, will be available on favorable terms, if at all. CONTRACTUAL OBLIGATIONS IMPACT OF INFLATION We do not believe that the effects of inflation had a significant impact on our revenue or operating income during fiscal years 2021 and 2020. However, there can be no assurance that our business will not be affected by inflation in the future. OFF-BALANCE SHEET ARRANGEMENTS As of April 3, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 3, 2021, and the effect such obligations are expected to have on our liquidity and cash flows in future periods. Capital commitments(1) Purchase obligations(2) Leases Long-term debt obligations(3) Total Payments Due By Fiscal Period Total Payments 2022 2023-2024 2025-2026 $ 78,879 $ 78,879 $ — $ — $ 340,351 94,396 2,328,592 284,443 17,691 68,259 52,242 24,927 129,393 3,666 17,814 302,253 2027 and thereafter — — 33,964 1,828,687 $2,842,218 $449,272 $206,562 $323,733 $1,862,651 (1) Capital commitments represent obligations for the purchase of property and equipment, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 3, 2021. (2) Purchase obligations represent payments due related to the purchase of materials and manufacturing services, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 3, 2021. (3) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2029 Notes, the 2031 Notes and the 2020 Term Loan, including anticipated interest payments not recorded as liabilities on our Consolidated Balance Sheet as of April 3, 2021. Debt obligations are classified based on their stated maturity date, and any future redemptions would impact our cash payments. See Note 9 of the Notes to Consolidated Financial Statements for further information. Other Contractual Obligations As of April 3, 2021, in addition to the amounts shown in the contractual obligations table above, we have $140.3 million of unrecognized income tax benefits and accrued interest and penalties, of which $21.2 million has been recorded as a liability. We are uncertain as to if, or when, such amounts may be settled. We also have an obligation related to the Transitional Repatriation Tax. We have elected to pay the remaining obligation of $5.4 million, which has been recorded as a liability, over four years. See Note 13 of the Notes to Consolidated Financial Statements for further information. As discussed in Note 10 of the Notes to Consolidated Financial Statements, we have two pension plans in Germany with a combined benefit obligation of approximately $14.0 million as of April 3, 2021. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the 30 amount and timing of any future cash outflows. approximately Pension $0.3 million in fiscal 2021 and are expected to be approximately $0.3 million in fiscal 2022. payments were benefit We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a specified percentage of their cash compensation. We record an obligation under the plan for the distributions to be made to participants upon certain triggering events. Although participants are required to make distribution elections at the time of enrollment, the amount and timing of any future cash outflows is uncertain until such triggering events occur. The total deferred compensation obligation as of April 3, 2021 was $32.8 million, of which $1.2 million is estimated to be paid out in fiscal 2022. See Note 10 of the Notes to Consolidated Financial Statements for further information. SUPPLEMENTAL PARENT AND GUARANTOR FINANCIAL INFORMATION In accordance with the Indentures, our obligations under the 2029 Notes and the 2031 Notes are fully and unconditionally guaranteed on a joint and several unsecured basis by the Guarantors, which are listed on Exhibit 22 to this Annual Report on Form 10-K. Each Guarantor is 100% owned, directly or indirectly, by Qorvo, Inc. (“Parent”). A Guarantor can be released in certain customary circumstances. Our other U.S. subsidiaries and our non-U.S. subsidiaries do not guarantee the 2029 Notes and the 2031 Notes (such subsidiaries are referred to as the “Non-Guarantors”). following presents summarized The financial information for the Parent and the Guarantors on a combined basis as of and for the periods indicated, after eliminating (i) intercompany transactions and balances among the Parent and Guarantors, and (ii) equity earnings from, and investments in, any Non-Guarantor. The summarized financial information may not necessarily be indicative of the financial position and results of operations had the combined Parent and Guarantors operated independently from the Non-Guarantors. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 results of operations and require significant judgment and estimates on the part of management. Our critical accounting policies are reviewed periodically with the Audit Committee of the Board of Directors. We also have other policies that we consider key accounting these policies typically do not policies; however, require us to make estimates or judgments that are difficult or subjective. See Note 1 of the Notes to Consolidated Financial Statements. Inventory Reserves. The valuation of inventory requires us to estimate obsolete or excess inventory. The determination of obsolete or excess inventory requires us to estimate the future demand for our products within specific time horizons, generally 12 to 24 months. The estimates of future demand that we use in the valuation of inventory reserves are the same as those used in our revenue forecasts and are also consistent with our manufacturing plans to enable consistency between inventory valuations and build decisions. Product- specific facts and circumstances reviewed in the inventory valuation process include a review of the customer base, market conditions, and customer acceptance of our products and technologies, as well as an assessment of the selling price in relation to the product cost. estimates used the in Summarized Balance Sheets (in thousands) Due from Non-Guarantors Other current assets Total current assets Non-current assets Current liabilities Payable to Non-Guarantors Other long-term liabilities Total long-term liabilities April 3, 2021 March 28, 2020 610,646 $ 532,440 $ 484,168 628,660 $1,143,086 $1,112,828 $2,450,960 $2,346,759 $ 240,943 $ 253,324 1,855,343 $ 395,323 $ 249,938 1,651,818 $2,250,666 $1,901,756 Summarized Statement of Income (in thousands) Revenue Gross profit Income from continuing operations Net income Fiscal Year 2021 $1,366,904 $ 508,576 18,899 $ 18,899 $ CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of consolidated financial statements requires management to use judgment and estimates. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results could differ from those estimates. The accounting policies that are most critical in the preparation of our consolidated financial statements are those that are both important financial condition and to the presentation of our Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted. Inventory reserves had an impact on margins of less than 2% in fiscal years 2021 and 2020. Property and Equipment. Periodically, we evaluate the period over which we expect to recover the economic value of our property and equipment, considering factors such as changes in machinery and equipment technology, our ability to re-use equipment across generations of process technology and historical usage trends. When we determine that the useful lives of assets are shorter or longer than we had originally estimated, we adjust the rate of depreciation to reflect the revised useful lives of the assets. We assess property and equipment for impairment when events or changes in circumstances indicate that the carrying value of the assets or the asset group may not be recoverable. Factors that we consider in deciding when to perform an impairment review include an adverse change in our use of the assets or an expectation that the assets will be sold or otherwise disposed. We assess the recoverability of the assets held and used by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining estimated useful lives against their respective carrying amounts. Assets identified as “held for sale” are recorded at the lesser of their carrying value or their fair market value less costs to sell. Impairment, if any, is based on the excess of the carrying amount over those assets. The process of the fair value of evaluating property and equipment for impairment is 31 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 highly subjective and requires significant judgment as we are required to make assumptions about items such as future demand for our products and industry trends. Business Acquisitions. We allocate the fair value of the purchase price to the assets acquired and liabilities assumed based on their estimated fair value. The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded to is assigned to our reporting unit goodwill. Goodwill that is expected to benefit from the synergies of the business combination. A number of assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with respect to the intangible assets acquired. The valuation of intangible assets requires our use of valuation techniques such as the income approach. The income approach future cash includes management’s estimation of flows (including expected revenue growth rates and profitability), the underlying product or technology life cycles and the discount rates applied to future cash flows. Judgment is also required in estimating the fair values of deferred tax assets and liabilities, uncertain tax positions and tax-related valuation allowances, which are initially estimated as of the acquisition date, as well as inventory, property and equipment, pre-existing liabilities or legal claims, deferred revenue and contingent consideration, each as may be applicable. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recognized in our Consolidated Statements of Income. annual perform an Goodwill. We impairment assessment of goodwill at the reporting unit level on the first day of the fourth quarter in each fiscal year, or more frequently if indicators of potential impairment exist. In accordance with ASC 350, we may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. In performing a qualitative assessment, we consider (i) our overall historical and projected future operating results, (ii) if there was a significant decline in our stock price for a sustained period, (iii) if there was a significant change in our market capitalization relative to our net book value, and (iv) if there was a prolonged or more significant slowdown in the worldwide economy of the semiconductor industry, as well as 32 other relevant events and factors affecting the reporting unit. If we assess these qualitative factors and conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we decide not to perform a qualitative assessment, then a quantitative impairment test is performed. In fiscal years 2021 and 2019, we completed qualitative assessments and concluded that based on the relevant facts and circumstances, it was more likely than not that each reporting unit’s fair value exceeded its related carrying value and no further impairment testing was required. a fiscal 2020, we performed test. Our quantitative impairment quantitative In impairment test considered both the income approach and the market approach to estimate each reporting unit’s fair value. The resulting fair value, based on the income and market approaches, was then compared to the carrying value to determine if impairment is necessary. As a result of the quantitative analysis performed, it was determined that the fair value of each of our reporting units substantially exceeded their carrying values. Identified Intangible Assets. We amortize finite-lived intangible assets (including developed technology, customer relationships, technology licenses, backlog and trade names) over their estimated useful life. In-process research and development (“IPRD”) assets represent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of the acquisition; initially, these are classified as IPRD and are not subject to amortization. Upon completion are transferred to developed technology and are amortized over their useful lives. The asset balances relating to abandoned projects are impaired and expensed to R&D. IPRD assets development, of We perform a quarterly review of significant intangible assets to determine whether facts and circumstances (including external factors such as industry and economic trends and internal factors such as changes in our business strategy and forecasts) indicate that the carrying amount of the assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group their of assets over respective carrying amounts. Impairments, if any, are based on the excess of the carrying amounts over the fair value of those assets and occur in the period in which the impairment determination was made. remaining lives against their Revenue Recognition. We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor, or at completion of a consignment process. Revenue is recognized when control of the promised goods or is from our recognized services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services. A majority of our revenue is recognized at a point in time, either on shipment or delivery of the product, depending on individual customer terms and conditions. Revenue from sales to our distributors is recognized upon shipment of the product to the distributors (sell-in). Revenue consignment programs at a point in time when the products are pulled from consignment inventory by the customer. Revenue recognized for products and services over- time is immaterial (less than 2% of overall revenue). We apply a five-step approach as defined in ASC 606, in “Revenue determining the amount and timing of revenue to be recognized: the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. from Contracts with Customers,” identifying (1) Sales agreements are in place with certain customers and contain terms and conditions with respect to payment, delivery, warranty and supply, but typically do not require minimum purchase commitments. In the absence of a sales agreement, our standard terms and conditions apply. We consider a customer’s purchase order, which is governed by a sales agreement or our standard terms and conditions, to be the contract with the customer. or to determine likely amount of consideration we expect Our pricing terms are negotiated independently, on a stand-alone basis. In determining the transaction price, we evaluate whether the price is subject to a refund net adjustment the to be entitled. consideration to which we expect Variable consideration in the form of rebate programs is offered to certain customers, including distributors, and represents less than 7% of net revenue. We determine variable consideration by estimating the most to receive from the customer. Our terms and conditions do not give our customers a right of return associated with the original sale of our products. However, we certain may circumstances, which include courtesy returns and like-kind exchanges. We reduce revenue and record reserves for product returns and allowances, rebate programs and scrap allowance based on historical experience or specific identification depending on the contractual terms of the arrangement. authorize returns under sales Our accounts receivable balance is from contracts with customers and represents our unconditional right to receive consideration from our customers. Payments are due upon completion of the performance obligation and subsequent invoicing. Substantially all payments are collected within our standard terms, which do not include any financing components. To Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 date, there have been no material impairment losses on accounts receivable. Contract assets and contract liabilities recorded on the Consolidated Balance Sheets were immaterial as of April 3, 2021 and March 28, 2020. We invoice customers upon shipment and recognize revenues in accordance with delivery terms. As of April 3, 2021, we had $87.5 million in remaining unsatisfied performance obligations with an original duration greater than one year, of which the majority is expected to be recognized as income over the next 12 months. We include shipping charges billed to customers in “Revenue” and include the related shipping costs in “Cost of goods sold” in the Consolidated Statements of Income. Taxes assessed by government authorities on revenue-producing transactions, including tariffs, value-added and excise taxes, are excluded from revenue in the Consolidated Statements of Income. contracts customers. We incur commission expense that is incremental to obtaining Sales with commissions (which are recorded in the “Selling, general and administrative” expense line item in the Consolidated Statements of Income) are expensed when incurred because such commissions are not owed until the performance obligation is satisfied, which coincides with the end of the contract term, and therefore no remaining period exists over which to amortize the commissions. In determining income for Income Taxes. financial statement purposes, we must make certain estimates and judgments in the calculation of tax expense, the resultant tax liabilities, and the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense. As part of our financial process, we assess on a tax jurisdictional basis the likelihood that our deferred tax assets can be recovered. If recovery is not more likely than not (a likelihood of less than 50 percent), the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that are estimated not to In this process, certain ultimately be recoverable. relevant criteria are evaluated including: the amount of income or loss in prior years, the existence of deferred tax liabilities that can be used to absorb deferred tax assets, the taxable income in prior carryback years that can be used to absorb net operating losses and credit carrybacks, future expected taxable income, and prudent and feasible tax planning strategies. Changes in taxable income, market conditions, U.S. or international tax laws, and other factors may change our judgment regarding whether we will be able to realize the deferred tax assets. These changes, if any, may require material adjustments to the net deferred tax assets and an accompanying reduction or increase in a in income tax expense which will result 33 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 corresponding increase or decrease in net income in the period when such determinations are made. See the Notes to Consolidated Financial Note 13 of Statements regarding for changes in the valuation allowance and net deferred tax assets. information additional tax As part of our financial process, we also assess the likelihood that our reporting positions will ultimately be sustained. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion or all of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which will in a corresponding increase or decrease in net income in the period when such determinations are made. See the Notes to Consolidated Financial Note 13 of information regarding our Statements for additional uncertain of positions tax unrecognized tax benefits. amount result and the tax April 3, 2021 was $197.5 million. A potential change in the associated interest rates would be immaterial to the results of our operations. Foreign Currency Exchange Rate Risk results are affected by As a global company, our movements in currency exchange rates. Our exposure may increase or decrease over time as our foreign business levels fluctuate in the countries where we have operations, and these changes could have a material impact on our financial results. The functional currency for most of our international operations is the U.S. dollar. We have foreign operations in Asia, Central America and Europe, and a substantial portion of our revenue is derived from sales to customers outside the U.S. Our international revenue is primarily denominated in U.S. dollars. Operating expenses and items related to our foreign- certain working capital based instances, are, operations in foreign currencies and denominated in the local therefore are affected by changes in the U.S. dollar exchange rate in relation to foreign currencies, such as the Costa Rican Colon, Euro, Pound Sterling, the U.S. dollar Renminbi, and Singapore Dollar. weakens compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. We seek to manage our foreign currency exchange risk in part through operational means. some If RECENT ACCOUNTING PRONOUNCEMENTS For a description of accounting pronouncements the Notes to recently adopted, see Note 1 of Consolidated Financial Statements. For fiscal 2021, we incurred a foreign currency loss of $3.8 million as compared to a loss of $2.2 million in fiscal 2020, which is recorded in “Other (expense) income, net.” ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management The primary objective of our financial risk management impact activities is to reduce the negative financial resulting from changes in interest foreign rates, currency exchange rates, equity prices and commodity prices (the “Underlying Exposures”). We manage these Underlying Exposures through operational means as well as financial instruments when deemed appropriate. The method and extent to which we are able to reduce the financial impact related to the Underlying Exposures may vary over time. Similarly, there can be no assurance that our risk management activities will be successful in mitigating the financial impact resulting from movements in the Underlying Exposures. through the use of financial various Interest Rate Risk We are exposed to interest rate risk via the terms of our Credit Facility, which is comprised of the 2020 Term Loan and Revolving Facility with variable interest the Notes to Consolidated rates. See Note 9 of Financial Statements for information. The outstanding balance related to the Credit Facility as of further 34 financial instrument holdings, Our including foreign receivables, cash and payables at April 3, 2021, were analyzed to determine their sensitivity to foreign exchange rate changes. In this sensitivity analysis, we assumed that the change in one currency’s rate relative to the U.S. dollar would not have an effect on other currencies’ rates relative to the U.S. dollar. All other factors were held constant. If the U.S. dollar declined in value 10% in relation to the re-measured foreign currency instruments, our net income would have increased by approximately $5.7 million in fiscal 2021. If the U.S. dollar increased in value 10% in currency re-measured relation instruments, our net income would have decreased by approximately $4.7 million in fiscal 2021. foreign the to Equity Price Risk Our marketable equity investments in publicly traded companies are subject to equity market price risk. Accordingly, a fluctuation in the price of each equity security could have an adverse impact on the fair value of our investments. As of April 3, 2021, our marketable equity investments were immaterial. See Note 7 of the Notes to Consolidated Financial Statements for further information. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Commodity Price Risk We routinely use precious metals in the manufacture of our products. Supplies for such commodities may from time to time become restricted, or general market factors and conditions may affect the pricing of such commodities. We also have an active reclamation process to capture any unused gold. While we attempt to mitigate the risk of increases in commodities-related costs, there can be no assurance that we will be able to successfully safeguard against potential short-term and long-term commodity price fluctuations. 35 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm Page 37 38 39 40 41 42 68 36 CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ASSETS Current assets: Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 April 3, 2021 March 28, 2020 Cash and cash equivalents Accounts receivable, net of allowance of $331 and $55 as of April 3, 2021 and $1,397,880 $ 714,939 March 28, 2020, respectively Inventories Prepaid expenses Other receivables Other current assets Total current assets Property and equipment, net Goodwill Intangible assets, net Long-term investments Other non-current assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued liabilities Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt Other long-term liabilities Total liabilities Commitments and contingent liabilities (Note 11) Stockholders’ equity: Preferred stock, $.0001 par value; 5,000 shares authorized; no shares issued and outstanding Common stock and additional paid-in capital, $.0001 par value; 405,000 shares authorized; 112,557 and 114,625 shares issued and outstanding at April 3, 2021 and March 28, 2020, respectively Accumulated other comprehensive income Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity 457,431 507,787 41,572 27,324 51,810 2,483,804 1,266,031 2,642,708 611,155 35,370 182,402 367,172 517,198 37,872 15,016 38,305 1,690,502 1,259,203 2,614,274 808,892 22,515 165,296 $7,221,470 $6,560,682 $ 313,868 $ 246,954 217,801 6,893 67,355 255,060 5,092 107,561 681,581 1,742,550 167,914 539,003 1,567,231 161,783 2,592,045 2,268,017 — — 4,244,740 29,649 355,036 4,290,377 2,288 — 4,629,425 4,292,665 $7,221,470 $6,560,682 See accompanying notes. 37 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Revenue Cost of goods sold Gross profit Operating expenses: Research and development Selling, general and administrative Other operating expense Total operating expenses Operating income Interest expense Other (expense) income, net Income before income taxes Income tax (expense) benefit Net income Net income per share: Basic Diluted Weighted average shares of common stock outstanding: Basic Diluted 2021 Fiscal Year 2020 2019 $4,015,307 $3,239,141 $3,090,325 2,131,741 1,917,378 1,895,142 1,883,566 1,321,763 1,195,183 570,395 367,238 39,306 484,414 343,569 70,564 450,482 476,074 52,161 976,939 898,547 978,717 906,627 423,216 216,466 (75,198) (24,049) (60,392) 32,265 (43,963) (80,711) 807,380 395,089 91,792 (73,769) (60,764) 41,333 $ 733,611 $ 334,325 $ 133,125 $ $ 6.43 $ 2.86 $ 6.32 $ 2.80 $ 1.07 1.05 114,034 117,007 124,534 116,016 119,293 127,356 See accompanying notes. 38 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net income Other comprehensive income (loss), net of tax: Unrealized gain on available-for-sale debt securities Change in pension liability Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term-investment nature Reclassification adjustments, net of tax: Foreign currency loss realized upon liquidation of subsidiary Amortization of pension actuarial loss Other comprehensive income (loss) Total comprehensive income 2021 Fiscal Year 2020 2019 $733,611 $334,325 $133,125 — (597) — 501 85 (651) 27,859 7,923 (3,396) 16 83 353 135 — 90 27,361 8,912 (3,872) $760,972 $343,237 $129,253 See accompanying notes. 39 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Balance, March 31, 2018 Net income Other comprehensive loss Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes Issuance of common stock in connection with employee stock purchase plan Cumulative-effect adoption of ASU 2014-09 Repurchase of common stock, including transaction costs Stock-based compensation Balance, March 30, 2019 Net income Other comprehensive income Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes Issuance of common stock in connection with employee stock purchase plan Cumulative-effect adoption of ASU 2016-02 Repurchase of common stock, including transaction costs Stock-based compensation Other Common Stock Shares Amount Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total 126,322 $5,237,085 $ (2,752) $(458,769) $4,775,564 — — — — — (3,872) 133,125 — 133,125 (3,872) 1,368 (10,833) 468 — 26,817 — (9,095) — (638,074) 72,460 — — — — — — (10,833) — 4,492 26,817 4,492 — — (638,074) 72,460 119,063 $4,687,455 $ (6,624) $(321,152) $4,359,679 — — — — — 8,912 334,325 — 334,325 8,912 1,551 (974) 452 — 28,657 — (6,441) — — (501,868) 77,107 — — — — — — — — — 69 (974) 28,657 69 (13,263) — 21 (515,131) 77,107 21 Balance, March 28, 2020 114,625 $4,290,377 $ 2,288 $ — $4,292,665 Net income Other comprehensive income Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes Issuance of common stock in connection with employee stock purchase plan Cumulative-effect adoption of ASU 2016-13 Repurchase of common stock, including transaction costs Stock-based compensation Other — — — — — 27,361 733,611 — 733,611 27,361 1,157 (29,163) 417 — 31,366 — (3,642) — — (136,568) 88,728 — — — — — — — — (29,163) — (38) 31,366 (38) (378,516) — (21) (515,084) 88,728 (21) Balance, April 3, 2021 112,557 $4,244,740 $29,649 $ 355,036 $4,629,425 See accompanying notes. 40 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating 2021 Fiscal Year 2020 2019 $ 733,611 $ 334,325 $ 133,125 activities: Depreciation Intangible assets amortization Loss on debt extinguishment Deferred income taxes Gain on Cavendish investment Impairment of equity investment Asset impairment Stock-based compensation expense Other, net Changes in operating assets and liabilities: Accounts receivable, net Inventories Prepaid expenses and other assets Accounts payable Accrued liabilities Income taxes payable and receivable Other liabilities Net cash provided by operating activities Cash flows from investing activities: 203,206 252,898 61,991 (18,136) — 2,775 — 89,322 (2,151) (91,275) 9,390 (18,490) 34,201 30,671 34,618 (20,778) 1,301,853 221,632 247,299 — (11,099) (43,008) 18,339 1,057 75,978 22,474 21,029 10,252 (14,513) 15,425 48,670 12,935 (15,149) 945,646 Purchases of property and equipment Purchases of available-for-sale debt securities Proceeds from sales and maturities of available-for-sale debt securities Purchases of businesses, net of cash acquired Other investing activities Net cash used in investing activities (186,960) — — (47,069) 15,371 (218,658) (164,104) — 1,950 (946,043) 2,455 (1,105,742) 208,646 454,451 90,201 (70,169) — — 15,901 71,580 2,711 (32,119) (39,590) 13,343 15,167 (3,899) (38,206) (10,778) 810,364 (220,937) (132,732) 133,132 — (27,017) (247,554) Cash flows from financing activities: Repurchase and payment of debt Proceeds from borrowings and debt issuances Repurchase of common stock, including transaction costs Proceeds from the issuance of common stock Tax withholding paid on behalf of employees for restricted stock units Other financing activities Net cash (used in) provided by financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at the beginning of the period (1,087,994) 1,206,750 (515,084) 42,598 (38,658) (9,535) — (1,050,680) 905,350 (638,074) 41,289 (24,835) (9,714) 659,000 (515,131) 50,198 (21,791) (6,717) (401,923) 165,559 (776,664) 1,425 682,697 715,612 (1,233) (1,166) 4,230 711,382 (215,020) 926,402 Cash, cash equivalents and restricted cash at the end of the period $ 1,398,309 $ 715,612 $ 711,382 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents Restricted cash included in “Other current assets” and “Other non-current assets” $ 1,397,880 $ 714,939 $ 711,035 429 673 347 Total cash, cash equivalents and restricted cash $ 1,398,309 $ 715,612 $ 711,382 Supplemental disclosure of cash flow information: Cash paid during the year for interest, net of amounts capitalized Cash paid during the year for income taxes, net of refunds Capital expenditures included in liabilities $ $ $ 81,232 $ 53,236 $ 56,469 $ 48,871 $ 55,513 $ 22,904 $ 56,039 69,453 37,728 See accompanying notes. 41 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Qorvo, Inc. and Subsidiaries Notes to Consolidated Financial Statements April 3, 2021 1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES Qorvo, Inc. was formed as the result of a business combination (the “Business Combination”) of RF Micro Devices, Inc. (“RFMD”) and TriQuint Semiconductor, Inc. (“TriQuint”), which closed on January 1, 2015. The Company is a leader in the development and commercialization of technologies and products for wireless and wired connectivity. We combine highly differentiated technologies, systems-level expertise and manufacturing scale to serve a diverse set of customers a broad portfolio of innovative solutions that enable a more connected world. The Company’s design expertise and manufacturing capabilities span multiple semiconductor process technologies. The Company’s primary wafer fabrication facilities are in North Carolina, Oregon and Texas, and its primary assembly and test facilities are in China, Costa Rica, Germany and Texas. The Company also sources products and materials through external suppliers. The Company operates design, sales and other manufacturing facilities throughout Asia, Europe and North America. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the the Company and its wholly owned accounts of intercompany accounts subsidiaries. All significant and in been consolidation. Certain items in the fiscal years 2020 and 2019 financial statements have been reclassified to conform to the fiscal 2021 presentation. transactions eliminated have Accounting Periods The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. The most recent three fiscal years ended on April 3, 2021, March 28, 2020 and March 30, 2019. Fiscal 2021 was a 53-week year and fiscal years 2020 and 2019 were 52-week years. of consolidated Use of Estimates The financial the preparation statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent liabilities. The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, product warranty obligations, valuation of inventories, tax related contingencies, valuation of long-lived and intangible assets, other contingencies and litigation, among others. The Company generally bases its 42 estimates on historical experience, expected future conditions and third-party evaluations. Accounting estimates require difficult and subjective judgments and actual results may differ from the Company’s estimates, particularly in light of the uncertainty the COVID-19 pandemic. relating to the impact of Certain accounting estimates that generally require consideration of expected future conditions were assessed by taking into account anticipated impacts from the COVID-19 pandemic as of April 3, 2021 and through the date of this Annual Report on Form 10-K using reasonably available information as of those dates. Cash and Cash Equivalents Cash and cash equivalents consist of demand deposit accounts, money market funds, and other temporary, highly liquid investments with original maturities of three months or less when purchased. Investments Marketable equity securities consist of common stock in publicly-traded companies and are carried at fair value with both the realized and unrealized gains and losses reported in “Other (expense) income, net.” Fair values are determined using quoted prices in active markets. The marketable equity securities are classified as short- term based on their highly liquid nature and are recorded in “Other current assets” in the Consolidated Balance Sheets. publicly-traded securities equity of The Company invests in limited partnerships which are accounted for using the equity method. These equity method investments are classified as “Long-term investments” in the Consolidated Balance Sheets. The Company records its share of the financial results of the limited partnerships in “Other (expense) income, net” in the Company’s Consolidated Statements of Income. The Company also invests in privately held companies for which the fair value of the investment is not readily determinable. These equity investments without a readily determinable fair value are measured at cost less impairment, adjusted for any changes in observable prices, and are classified as “Long-term investments” in the Consolidated Balance Sheets. The Company assesses these investments for impairment on a quarterly basis and considers both qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Qualitative factors considered include the investee’s financial condition and business outlook, market for technology and other relevant events and factors affecting the investee. Investments are impaired when their fair value is less than their carrying value. Fair Value Measurement The Company measures and reports certain financial assets and liabilities on a recurring basis. Fair value is the price that would be received to sell an asset or Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 its The The valuation Company technique. categorizes paid to transfer a liability in an orderly transaction the measurement between market participants at date. financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the three-level respective hierarchy for fair value measurement is described as follows: ‰ Level 1—includes instruments for which inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. ‰ Level 2—includes instruments for which the inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly, and fair value can be determined through the use of models or other valuation methodologies that do not require significant judgment since the inputs are corroborated by readily observable data. ‰ Level 3—includes are based instruments the valuations are unobservable and significant to the overall fair value measurement. These inputs are supported by little the use of or no market activity and reflect significant management judgment. for which that inputs on The Company also holds assets whose fair value is measured and recorded on a nonrecurring basis. These assets include equity method investments, equity investments without a readily determinable fair value, and certain non-financial assets, such as intangible assets and property and equipment. See Note 7 for information on equity method investments and equity investments without a readily determinable fair value and Note 12 for further information on impairment of property and equipment. further The carrying values of cash, cash equivalents and restricted cash, accounts receivable, accounts payable and other accrued liabilities approximate fair values because of the relatively short-term maturities of these instruments. See Note 9 for further disclosures related to the fair value of the Company’s long-term debt. Inventories Inventories are stated at the lower of cost or net is based on standard cost, realizable value (cost which approximates actual average cost). Cost includes labor, materials and manufacturing overhead related to the purchase and production of inventories. Abnormal production levels are charged to “Cost of goods sold” in the period incurred rather than as a portion of inventory cost. The Company’s business is subject to the risk of technological and design changes. The Company evaluates inventory levels quarterly against demand forecasts on a material or product family basis to evaluate its overall risk. Reserves are inventory adjusted to reflect inventory values in excess of demand forecasts and management’s analysis and assessment of overall inventory risk. In the event the Company sells inventory that had been covered by a specific inventory reserve, the sale is recorded at the actual selling price and the related cost of goods sold is recorded at the reserve. inventory cost, net of the full Product Warranty The Company generally sells products with a limited warranty on product quality. The Company accrues for known warranty issues if a loss is probable and can be reasonably estimated and accrues for estimated incurred but unidentified issues based on historical activity. The accrual and the related expense for known product warranty issues were not significant during the periods presented. Due to product testing and the short time typically between product shipment and the detection and correction of product failures and the historical rate of the accrual and but expense related unidentified issues was also not significant during the periods presented. losses, estimated incurred for Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, to 39 years. The Company ranging from one year capitalizes interest on borrowings related to eligible capital expenditures. Capitalized interest is added to the cost of qualified assets and depreciated together with that asset cost. The Company’s assets acquired under finance leases and leasehold improvements are amortized over the lesser of the asset life or lease term (which is reasonably assured) and included in depreciation. The Company records capital-related government grants earned as a reduction to property and equipment and depreciates such grants over the estimated useful lives of the associated assets. The Company periodically evaluates the period over which it expects to recover the economic value of the Company’s property and equipment, considering factors such as changes in machinery and equipment technology, the ability to re-use equipment across generations of process technology and historical usage trends. If the Company determines that the lives of its assets are shorter or longer than useful the rate of depreciation is originally estimated, adjusted to reflect the assets. the revised useful lives of 43 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements The Company assesses property and equipment for impairment when events or changes in circumstances indicate that the carrying amount of its assets may not be recoverable. Factors that are considered in review deciding when to perform an impairment the include an adverse change in the use of Company’s assets or an expectation that the assets will be sold or otherwise disposed. The Company assesses the recoverability of the assets held and used by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining estimated useful lives against respective carrying amounts. Assets identified as “held for sale” are recorded at the lesser of their carrying value or their fair market value less costs to sell. is based on the excess of the carrying amount over the fair value of those assets. Impairment, if any, their Leases The Company determines that a contract contains a lease at lease inception if the contract conveys the right to control the use of an identified asset for a In period of evaluating whether the right to control an identified asset exists, the Company assesses whether it has the right to direct the use of the identified asset and obtain substantially all of the economic benefit from the use of the identified asset. time in exchange for consideration. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. To the Company’s agreements have the extent that variable lease payments, includes the Company variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. The Company elected the practical expedient not to separate lease and non-lease components for substantially all of its classes of leases and to account for the combined lease and non-lease components as a single lease component. the Company made an accounting policy election to exclude leases with an initial term of 12 months or less from the balance sheet. In addition, 44 Business Acquisitions The Company allocates the fair value of the purchase price to the assets acquired and liabilities assumed based on their estimated fair value. The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded to goodwill. Goodwill is assigned to the Company’s reporting unit that is expected to benefit from the synergies of the business combination. A number of assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with respect to the intangible assets acquired. The valuation of intangible to use valuation assets requires the Company techniques such as the income approach. The income approach includes management’s estimation of future cash flows (including expected revenue growth rates and profitability), the underlying product or technology life cycles and the discount rates applied to future cash flows. Judgment is also required in estimating the fair values of deferred tax assets and liabilities, uncertain tax positions and tax-related valuation allowances, which are initially estimated as of the acquisition date, as well as inventory, property and equipment, pre-existing liabilities or legal claims, deferred revenue and contingent consideration, each as may be applicable. applicable, consideration, where While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recognized in the Consolidated Statements of Income. an annual performs Goodwill The Company impairment assessment of goodwill at the reporting unit level on the first day of the fourth quarter in each fiscal year, or more frequently if indicators of potential impairment exist. In accordance with Accounting Standards Codification (“ASC”) 350, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 In performing a qualitative assessment, the Company considers (i) its overall historical and projected future operating results, (ii) if there was a significant decline in the Company’s stock price for a sustained period, (iii) if there was a significant change in the Company’s market capitalization relative to its net book value, and (iv) if there was a prolonged or more significant of slowdown the in semiconductor relevant events and factors affecting the reporting unit. If the Company assesses these qualitative factors and concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company decides not to perform a quantitative qualitative impairment test is performed. the worldwide economy industry, as well as other assessment, then a years 2021 and 2019, In fiscal the Company completed qualitative assessments and concluded that based on the relevant facts and circumstances, it was more likely than not that each reporting unit’s fair value exceeded its related carrying value and no further impairment testing was required. The test. Company’s In fiscal 2020, the Company performed a quantitative impairment quantitative impairment test considered both the income approach and the market approach to estimate each reporting unit’s fair value. The resulting fair value, based on the income and market approaches, was then compared to the carrying value to determine if impairment is necessary. As a result of the quantitative analysis performed, it was determined that the fair value of each of the Company’s reporting units substantially exceeded their carrying values. life. developed technology, Identified Intangible Assets The Company amortizes finite-lived intangible assets customer (including relationships, technology licenses, backlog and trade names) over their estimated useful In-process research and development (“IPRD”) assets represent the fair value of incomplete research and development (“R&D”) projects that had not reached technological feasibility as of the date of the acquisition and are initially not subject to amortization. Upon completion of development, IPRD assets are transferred to developed technology and are amortized over their useful lives. The asset balances relating to abandoned projects are impaired and expensed to R&D. The Company performs a quarterly review of significant facts and intangible assets to determine whether factors such as circumstances (including external industry and economic trends and internal factors such as changes in the Company’s business strategy and forecasts) indicate that the carrying amount of the If such facts and assets may not be recoverable. the Company assesses the circumstances exist, recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over respective carrying amounts. Impairments, if any, are based on the excess of the carrying amounts over the fair value of those assets and occur in the period in which the impairment determination was made. remaining lives against their their Accrued Liabilities The “Accrued liabilities” balance as of April 3, 2021 and March 28, 2020, includes accrued compensation and benefits of $135.4 million and $126.1 million, respectively, and interest payable of $17.5 million and $22.8 million, respectively. Revenue Recognition The Company generates revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor, or at completion of a consignment process. Revenue is recognized when the promised goods or services is control of in an transferred to the Company’s customers, amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. A majority of the Company’s revenue is recognized at a point in time, either on shipment or delivery of the product, depending on individual customer terms and conditions. Revenue from sales to the Company’s distributors is recognized upon shipment of to the distributors the product (sell-in). Revenue is recognized from the Company’s consignment programs at a point in time when the products are pulled from consignment inventory by the customer. Revenue recognized for products and services over time is immaterial (less than 2% of revenue). The Company applies a five-step overall approach as defined in ASC 606, “Revenue from Contracts with Customers,” in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; identifying the contract; in performance (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. obligations the (2) Sales agreements are in place with certain customers and contain terms and conditions with respect to payment, delivery, warranty and supply, but typically do In the not require minimum purchase commitments. absence of a sales agreement, the Company’s standard terms and conditions apply. The Company considers a customer’s purchase order, which is governed by a sales agreement or the Company’s standard terms and conditions, to be the contract with the customer. 45 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements are terms pricing to refund or adjustment negotiated The Company’s independently, on a stand-alone basis. In determining the transaction price, the Company evaluates whether the price is subject to determine the net consideration to which the Company expects to be entitled. Variable consideration in the form of rebate programs is offered to certain customers, including distributors, and represents less than 7% of net revenue. The Company determines variable consideration by estimating the most likely amount of consideration it expects to receive from the customer. The Company’s terms and conditions do not give its customers a right of return associated with the original sale of the Company may authorize sales returns under certain circumstances, which include courtesy returns and like-kind exchanges. The Company reduces revenue and records reserves returns and for product rebate programs and scrap allowance allowances, specific experience on based identification depending on the contractual terms of the arrangement. its products. However, historical or of the due and customers represents are obligation customers. Payments performance The Company’s accounts receivable balance is from the contracts with Company’s unconditional right to receive consideration upon from its completion and subsequent invoicing. Substantially all payments are collected within the Company’s standard terms, which do not include any financing components. To date, there have been no material impairment losses on accounts receivable. Contract assets and contract liabilities recorded on the Consolidated Balance Sheets were immaterial as of April 3, 2021 and March 28, 2020. The Company invoices customers upon shipment and recognizes revenues in accordance with delivery terms. As of April 3, 2021, the Company had $87.5 million in remaining unsatisfied performance obligations with an original duration greater than one is expected to be year, of which the majority recognized as income over the next 12 months. The Company includes shipping charges billed to customers in “Revenue” and includes the related shipping costs in “Cost of goods sold” in the Consolidated Statements of Income. Taxes assessed by government authorities on revenue-producing transactions, including tariffs, value-added and excise taxes, are excluded from revenue in the Consolidated Statements of Income. is The Company incurs commission expense that incremental to obtaining contracts with customers. Sales commissions (which are recorded in the “Selling, general and administrative” expense line 46 item in the Consolidated Statements of Income) are expensed when incurred because such commissions are not owed until the performance obligation is satisfied, which coincides with the end of the contract term, and therefore, no remaining period exists over which to amortize the commissions. Research and Development The Company charges all R&D costs to expense as incurred. Income Taxes The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the temporary differences reporting and tax basis of between the financial assets and liabilities and for tax carryforwards. Deferred tax assets and liabilities for each tax jurisdiction are measured using the enacted statutory tax rates in effect the years in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets to the extent the Company determines it is more likely than not that some portion or all of its deferred tax assets will not be realized. for A more likely than not recognition threshold is required to be met before the Company recognizes the benefit of an income tax position in its financial statements. The Company’s policy is to recognize accrued interest and penalties, if incurred, on any unrecognized tax benefits as a component of income tax expense. is the Company’s current intent and policy to It repatriate certain previously taxed earnings of foreign subsidiaries from outside the U.S. Accordingly, the Company recognizes a deferred tax liability for income taxes on certain unremitted foreign earnings of foreign subsidiaries. For earnings which remain permanently reinvested, to estimate the additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated. is not practical it ASC 718, Stock-Based Compensation “Compensation — Stock Under Compensation,” stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award using an option pricing model for stock options (Black-Scholes) and market price for restricted stock units, and is recognized as expense over the employee’s requisite service period. total remaining unearned As of April 3, 2021, compensation cost related to unvested restricted stock units was $103.7 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 of the remainder the Company’s Foreign Currency Translation The financial statements of foreign subsidiaries have been translated into U.S. dollars in accordance with ASC 830, “Foreign Currency Matters.” The functional currency for most of the Company’s international operations is the U.S. dollar. The functional currency for foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rates on the balance sheet dates. Revenues and expenses are translated using the weighted average exchange rates throughout the shown separately as a component of “Accumulated other comprehensive income” within “Stockholders’ equity” in the Consolidated Balance Sheets. Foreign currency transaction gains or losses (transactions denominated in a currency other than the functional currency) are reported in “Other income, net” in the (expense) Consolidated Statements of Income. adjustments Translation year. are Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a current lifetime expected credit loss methodology to be used to measure impairments of accounts receivable and other financial assets. Using this methodology will result in earlier recognition of losses than under the previous incurred loss approach, which requires waiting to recognize a loss until it is probable of being incurred. The Company adopted this standard using the modified retrospective transition method, in the first quarter of fiscal 2021, which resulted in a cumulative-effect adjustment to retained earnings of less than $0.1 million. at this new standard, each measurement Under the Company’s trade receivables are now evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These aggregated risk pools will be reassessed A combination of factors is considered in determining the appropriate estimate of expected credit losses which include broad-based economic indicators as well as customers’ financial strength, credit standing, payment history and any historical defaults. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. date. 2. CONCENTRATIONS OF CREDIT RISK The Company’s principal financial instrument subject to potential concentration of credit risk is accounts receivable, which is unsecured. The Company provides an allowance for doubtful accounts equal to estimated losses expected to be incurred in the collection of accounts receivable. The Company’s trade receivables are evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics, adjusting for broad-based economic indicators as well as customer specific factors. The Company has adopted credit policies and standards intended to accommodate industry growth and inherent risk and it risks are moderated by the believes that credit financial stability of its major customers, conservative payment terms and the Company’s strict credit policies. The Company provides products to its largest end customer, Apple Inc. through sales to multiple contract manufacturers, which in the aggregate accounted for approximately 30%, 33% and 32% of total revenue in fiscal years 2021, 2020 and 2019, respectively. Huawei Technologies Co., Ltd. and affiliates (“Huawei”) accounted for less than 5%, 10% and 15% of total revenue in fiscal years 2021, 2020 and 2019, respectively. These customers primarily purchase radio frequency (“RF”) solutions for a variety of mobile devices. In May 2019, the Bureau of Industry and Security of the U.S. Department of Commerce (“Commerce”) added Huawei Technologies Co., Ltd. and over 100 of List maintained by its affiliates to the Entity Commerce, which caused the Company to temporarily suspend the export, reexport, and transfer of products to Huawei. In August 2020, Commerce issued a final rule adding additional Huawei non-U.S. affiliates to the Entity List, confirming the expiration of a temporary general license applicable to Huawei, and amending the foreign-produced direct product rule in a manner that its represents a significant expansion of application to Huawei. While the Company was able to ship certain products to Huawei in fiscal years 2021 and 2020, trade restrictions and the ability to secure any required licenses will continue to impact sales to Huawei. The Company’s three largest accounts receivable balances comprised approximately 58% and 49% of aggregate gross accounts receivable as of April 3, 2021 and March 28, 2020, respectively. 47 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements 3. INVENTORIES The components of inventories, net of reserves, are as follows (in thousands): Raw materials Work in process Finished goods Total inventories April 3, 2021 March 28, 2020 $134,959 283,067 89,761 $507,787 $112,671 291,028 113,499 $517,198 4. PROPERTY AND EQUIPMENT The components of property and equipment are as follows (in thousands): Land Building and leasehold improvements Machinery and equipment Construction in progress Total property and April 3, 2021 March 28, 2020 25,842 $ 25,842 $ 411,180 404,075 2,282,059 2,145,511 108,563 99,172 equipment, gross 2,827,644 2,674,600 Less accumulated depreciation Total property and equipment, net (1,561,613) (1,415,397) $ 1,266,031 $ 1,259,203 5. BUSINESS ACQUISITIONS the Company completed the During fiscal 2021, acquisition of 7Hugs Labs S.A.S. (“7Hugs”). During fiscal 2020, the Company completed the acquisitions of Decawave Limited (“Decawave”), Custom MMIC (“Custom MMIC”), Cavendish Design Services, (“Cavendish”), and Active-Semi Kinetics Limited International, goodwill resulting from these acquisitions is attributed to synergies and other benefits that are expected to be generated from these transactions. (“Active-Semi”). The Inc. Inc. The operating results of these companies, which were not material either individually or in the aggregate, have been included in the Company’s consolidated financial statements as of the acquisition dates. As a result, pro forma results of operations for these acquisitions have not been presented. 7Hugs Labs S.A.S On October 1, 2020, the Company acquired all of the outstanding equity interests of 7Hugs, a private developer of Ultra Wideband (“UWB”) software and solutions, for a total purchase price of $48.7 million. The acquisition expands the Company’s product 48 the ongoing offerings and is expected to support development and adoption of UWB products and solutions. The purchase price was allocated based on the the assets acquired and estimated fair values of liabilities assumed as follows (in thousands): Intangible assets Goodwill Net tangible liabilities(1) Deferred tax liability, net Total purchase price $40,100 21,840 (5,652) (7,616) $48,672 (1) Includes cash acquired of $1.0 million. The intangible assets acquired consisted of developed technology. The fair value of the developed technology acquired was determined based on an income approach using the “relief from royalty method,” which estimated the value by discounting the royalties avoided by acquiring the technology to present value as of the valuation date. The acquired developed technology asset is being amortized on a straight-line basis over the estimated useful life of 10 years. The Company will continue to evaluate certain assets, liabilities and tax estimates over the measurement period (up to one year from the acquisition date). Goodwill recognized from the acquisition of 7Hugs has been assigned to the Mobile Products (“MP”) segment and is not deductible for income tax purposes. During fiscal 2021, the Company recorded acquisition and integration related costs associated with the acquisition of 7Hugs totaling $2.4 million in “Other operating expense” in the Consolidated Statement of Income. Decawave Limited On February 21, 2020, the Company acquired all of the outstanding equity interests of Decawave, a pioneer in UWB technology and provider of UWB solutions for mobile, automotive and Internet of Things for a total purchase price of (“IoT”) applications, $372.2 million. the Company’s product and technology offerings that enable real-time, highly accurate and reliable local area precision-location services. acquisition expands The In addition to the purchase price consideration, the Company agreed to pay employees of Decawave total compensation of $23.1 million, primarily subject to is being their continued employment. This amount recognized compensation expense over the period the employees provide the required services. post-combination as Notes to Consolidated Financial Statements The purchase price, which was finalized during fiscal 2021, was allocated based on the estimated fair values of the assets acquired and liabilities assumed as follows (in thousands): Intangible assets Goodwill Net tangible assets(1) Deferred tax liability, net Total purchase price $246,060 145,581 2,118 (21,553) $372,206 (1) Includes cash acquired of $5.0 million. The more significant intangible assets acquired included developed technology of $235.0 million and customer relationships of $10.0 million. The fair value of the Decawave developed technology acquired was determined based on an income approach using the “excess earnings method,” which estimated the values of the intangible asset by discounting the future projected earnings of the asset to present value as of the valuation date. The acquired developed technology asset is being amortized on a straight-line basis over its estimated useful life of 7 years. The fair value of Decawave customer relationships acquired was determined based on an income approach using the “with and without method,” in which the value of the asset is determined by the difference in discounted cash flows of the profitability of the Company “with” the asset and the profitability of the Company “without” the asset. These customer relationships are being amortized on a straight-line basis over their estimated useful lives of 3 years. Goodwill recognized from the acquisition of Decawave has been assigned to the MP segment and is not deductible for income tax purposes. During fiscal years 2021 and 2020, the Company recorded post-combination compensation expense and other acquisition and integration related costs associated with the acquisition of Decawave totaling in $11.3 million and $12.4 million, “Other operating expense” in the Consolidated Statements of Income. respectively, of high-performance Custom MMIC Design Services, Inc. On February 6, 2020, the Company acquired all of the outstanding equity interests of Custom MMIC, a supplier gallium arsenide (“GaAs”) and gallium nitride (“GaN”) monolithic microwave integrated circuits (“MMICs”) for defense, aerospace and commercial applications, for a total purchase price of $91.7 million. The acquisition expands the Company’s millimeter wave (“mmWave”) capabilities for product offerings in defense and commercial markets. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 purchase price was of $86.0 million comprised and cash of The consideration contingent consideration of up to $10.0 million which is payable to the sellers in the first quarter of fiscal 2022 if certain revenue targets were achieved over a one-year period from the acquisition date. The estimated fair value of the contingent consideration was $5.7 million on the acquisition date and was remeasured to fair value each period with changes recognized in “Other operating expense.” The fair value of the contingent consideration “Accrued in in liabilities” and is equal to the maximum amount payable of $10.0 million as of April 3, 2021. See Note 7 for value further measurement. information related to fair included liability was entered agreement In addition to the purchase price consideration, an installment for $15.5 million which is payable to certain key employees of Custom MMIC and is subject to their continued employment over a three-year period from the acquisition date. This amount is being recognized as post-combination compensation expense over the requisite service period. into The purchase price, which was finalized during fiscal 2021, was allocated based on the estimated fair values of the assets acquired and liabilities assumed as follows (in thousands): Intangible assets Goodwill Net tangible assets(1) Total purchase price $31,100 55,026 5,616 $91,742 (1) Includes cash acquired of $2.3 million. The more significant intangible assets acquired were customer relationships of $26.9 million. The fair value of Custom MMIC customer relationship intangibles acquired was determined based on an income approach using the “excess earnings method,” which the intangible assets by estimated the values of discounting the future projected earnings of the asset to present value as of the valuation date. These customer relationships are being amortized on a straight-line basis over their estimated useful lives of 10 years. Goodwill recognized from the acquisition of Custom MMIC has been assigned to the Infrastructure and Defense Products (“IDP”) segment and is deductible for income tax purposes. During fiscal years 2021 and 2020, the Company recorded post-combination compensation expense and other acquisition and integration related costs associated with the acquisition of Custom MMIC 49 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements totaling $10.3 million and $9.4 million, respectively, in “Other operating expense” in the Consolidated Statements of Income. of high-performance Cavendish Kinetics Limited As of September 28, 2019, the Company had an investment in preferred shares in Cavendish, a private supplier RF microelectromechanical system (“MEMS”) technology for antenna tuning applications, with a carrying value of $59.4 million. The Company accounted for this investment as an equity investment without a readily value using the measurement determinable fair alternative 321, with accordance “Investments–Equity Securities.” ASC in On October 4, 2019, the Company acquired the remaining issued and outstanding capital of Cavendish for cash consideration of $198.4 million. The for acquisition advances RF MEMS technology applications across the Company’s products, and the technology will be transitioned into high-volume manufacturing for mobile devices and other markets. previously the remaining equity interest in The purchase of Cavendish was considered to be an acquisition achieved in stages, whereby the previously held equity interest was remeasured at its acquisition-date fair value. The Company determined that the fair value of its was $102.4 million based on the purchase consideration exchanged to acquire the remaining issued and outstanding capital of Cavendish. This resulted in recognition of a gain of $43.0 million in fiscal 2020, which is recorded in “Other (expense) income, net” in the Consolidated Statement of Income. investment equity held The purchase price was calculated as follows (in thousands): Cash consideration paid to Cavendish Fair value of equity interest previously held by the Company Total purchase price $198,385 102,383 $300,768 The purchase price, which was finalized during fiscal 2021, was allocated based on the estimated fair values of the assets acquired and liabilities assumed as follows (in thousands): Intangible assets Goodwill Net tangible liabilities(1) Deferred tax liability, net Total purchase price (1) Includes cash acquired of $1.8 million. $204,350 102,893 (111) (6,364) $300,768 50 The most significant intangible asset acquired was developed technology of $204.0 million. The fair value of the Cavendish developed technology acquired was determined based on an income approach using the “excess earnings method,” which estimated the value the intangible asset by discounting the future of projected earnings of the asset to present value as of the valuation date. This developed technology is being amortized on a straight-line basis over its estimated useful life of 9 years. Goodwill recognized from the acquisition of Cavendish has been assigned to the MP segment and is not deductible for income tax purposes. During fiscal years 2021 and 2020, the Company recorded post-combination compensation expense and other acquisition and integration related costs associated with the acquisition of Cavendish totaling $0.7 million and $3.8 million, respectively, in “Other operating expense” in the Consolidated Statements of Income. Active-Semi International, Inc. On May 6, 2019, the Company acquired all of the outstanding equity interests of Active-Semi, a private fabless supplier of programmable analog power management solutions, for a total purchase price of $307.9 million. the Company’s product offerings in power management markets. acquisition expanded The The purchase price, which was finalized during fiscal 2021, was allocated based on the estimated fair values of the assets acquired and liabilities assumed as follows (in thousands): Intangible assets Goodwill Net tangible assets(1) Deferred tax liability, net Total purchase price $158,400 130,913 22,902 (4,321) $307,894 (1) Includes cash acquired of $10.0 million. The more significant intangible assets acquired included developed technology of $76.7 million, customer relationships of $40.9 million and IPRD of $40.6 million. of fair values the Active-Semi The developed technology and IPRD acquired were determined based on an income approach using the “excess earnings method,” which estimated the values of the intangible assets by discounting the future projected earnings of the asset to present value as of the valuation date. The acquired developed technology assets are being amortized on a straight-line basis over their estimated useful lives of 5 to 9 years. Notes to Consolidated Financial Statements During fiscal 2020, $31.0 million of IPRD assets were completed, transferred to finite-lived intangible assets, and are being amortized over their estimated useful lives of 5 to 7 years. The remaining IPRD of $9.6 million is expected to be completed during fiscal 2022 with remaining costs to complete of less than $1.5 million. The fair value of Active-Semi customer relationships acquired was determined based on an income approach using the “with and without method,” in which the value of the asset is determined by the difference in discounted cash flows of the profitability of the Company “with” the asset and the profitability of the Company “without” the asset. These customer relationships are being amortized on a straight-line basis over their estimated useful lives of 5 years. 6. GOODWILL AND INTANGIBLE ASSETS Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 recognized from the acquisition of Active- Goodwill Semi has been assigned to the IDP segment and is not deductible for income tax purposes. During fiscal years 2021 and 2020, the Company recorded post-combination compensation expense and other acquisition and integration related costs associated with the acquisition of Active-Semi of $0.8 million and $25.3 million, respectively, in “Other operating expense” in the Consolidated Statements of the Company also Income. During fiscal 2020, recorded $4.2 million of acquisition and integration related costs in “Cost of goods sold” in the Consolidated Statement of Income. The changes in the carrying amount of goodwill for fiscal 2021 are as follows (in thousands): Balance as of March 28, 2020(1) Goodwill resulting from 7Hugs acquisition (Note 5) Measurement period adjustments from prior acquisitions Effect of changes in foreign currency exchange rates Balance as of April 3, 2021(1) Mobile Products $2,005,432 21,840 (2,074) 9,185 $2,034,383 Infrastructure and Defense Products $608,842 — (517) — $608,325 Total $2,614,274 21,840 (2,591) 9,185 $2,642,708 (1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs of $621.6 million. The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands): April 3, 2021 March 28, 2020 Developed technology Customer relationships Technology licenses Backlog Trade names IPRD Total(1) Gross Carrying Amount Gross Carrying Amount Accumulated Amortization Accumulated Amortization $1,295,113 $ 750,044 $1,331,262 $ 652,411 346,799 2,327 267 283 N/A $1,768,918 $1,157,763 $1,810,979 $1,002,087 403,407 2,076 1,600 636 N/A 459,052 2,368 1,600 1,090 9,695 464,015 3,272 1,600 1,224 9,606 (1) Amounts include the impact of foreign currency translation. Total intangible assets amortization expense was $252.9 million, $247.3 million and $454.5 million in fiscal years 2021, 2020 and 2019, respectively. 51 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements The following table provides the Company’s estimated amortization expense for intangible assets based on current amortization periods for the periods indicated (in thousands): Fiscal Year 2022 2023 2024 2025 2026 Estimated Amortization Expense $122,000 106,000 94,000 79,000 73,000 7. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS Equity Method Investments The Company invests in limited partnerships which are accounted for using the equity method. The carrying amounts of these investments as of April 3, 2021 and March 28, 2020 were $29.8 million and $14.2 million, respectively, and are classified as “Long-term investments” in the Consolidated Balance Sheets. During fiscal 2021, the Company recorded $21.5 million of income based on its share of the limited partnerships’ earnings in “Other (expense) income, net” in the Consolidated Statement of Income. During fiscal 2021, the Company received cash distributions of $5.9 million from one of these investments. The distributions were recognized as a reduction to the carrying value of the investment, the majority of which represented a return of investment in cash flows from investing activities. Equity Investments Without a Readily Determinable Fair Value During fiscal 2020, the Company recorded an impairment of $18.3 million on an equity investment without a readily determinable fair value based on recent observable price changes present at the time. During fiscal 2021, the Company recorded an additional impairment of $2.8 million to fully impair this investment. These amounts are recorded in “Other (expense) income, net” in the Consolidated Statements of Income. Fair Value of Financial Instruments The Company’s financial assets and liabilities measured at fair value on a recurring basis as determined using the levels of inputs within the fair value hierarchy are as follows (in thousands): April 3, 2021 Marketable equity securities Invested funds in deferred compensation plan(1) Contingent earn-out liability(2) March 28, 2020 Marketable equity securities Invested funds in deferred compensation plan(1) Contingent earn-out liability(2) Quoted Prices In Active Markets For Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) $ 3,802 32,824 — $ 459 19,398 — $ $ — — — — — — $ — — (10,000) $ — — (5,700) Total $ 3,802 32,824 (10,000) $ 459 19,398 (5,700) (1) Invested funds under the Company’s non-qualified deferred compensation plan are held in a rabbi trust and consist of mutual funds. The fair value of the mutual funds is calculated using the net asset value per share as determined by quoted active market prices of the underlying investments. See Note 10 for further information on the Company’s non-qualified deferred compensation plan. (2) The Company recorded a contingent earn-out liability in conjunction with the Custom MMIC acquisition. The fair value of this liability is estimated using an option pricing model and is remeasured to fair value each period with changes in fair value reported in “Other operating expense” in the Consolidated Statements of Income. As of April 3, 2021, the fair value of the contingent consideration liability was equal to the maximum amount payable of $10.0 million. 52 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 8. LEASES Operating Leases The Company its corporate, leases certain of manufacturing and other facilities from multiple third- party real estate developers. The Company also leases various machinery and office equipment. These operating leases expire at various dates through 2036, and some of these leases have renewal options, with the longest ranging up to two, ten-year periods. is not recorded on the Consolidated Balance Sheets as of April 3, 2021 and March 28, 2020. The lease has an initial term of five years and includes multiple renewal options, with the maximum lease term not to exceed 30 years. Upon lease commencement, right-of-use assets and lease $12.5 million of liabilities is expected to be recognized by the Company. 9. LONG-TERM DEBT Operating thousands): leases are classified as follows (in Debt as of April 3, 2021 and March 28, 2020 is as follows (in thousands): Other non-current assets Other current liabilities Other long-term liabilities April 3, 2021 March 28, 2020 $62,925 $15,068 $53,172 $65,107 $15,917 $58,077 Details of operating leases are as follows (in thousands): Fiscal Year 2021 2020 $17,382 $ 7,062 $ 3,972 $15,184 $ 6,878 $ 3,098 Operating lease expense Short-term lease expense Variable lease expense Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $18,697 $16,504 Operating lease assets obtained in exchange for new lease liabilities Weighted-average remaining lease term (years) Weighted-average discount rate $12,899 $13,201 7.9 3.82% 7.8 4.06% The aggregate future lease payments for operating leases as of April 3, 2021 are as follows (in thousands): 2022 2023 2024 2025 2026 Thereafter Total lease payments Less imputed interest Present value of lease liabilities $ 17,194 12,608 9,823 7,715 7,603 23,900 78,843 (10,603) $ 68,240 In fiscal 2018, the Company entered into a lease for a facility in Beijing, China that will allow the Company to consolidate several leased facilities as well as provide additional manufacturing space. The lease term is expected to commence in fiscal 2022 and therefore, April 3, 2021 March 28, 2020 Term loan $ 197,500 $ 100,000 7.00% senior notes due 2025 5.50% senior notes due 2026 4.375% senior notes due 2029 3.375% senior notes due 2031 Finance leases Unamortized premium and issuance costs, net Less current portion of long-term — — 850,000 700,000 1,617 23,404 900,000 550,000 — 2,252 (1,475) (1,532) debt (5,092) (6,893) Total long-term debt $1,742,550 $1,567,231 Credit Agreement On September 29, 2020, the Company and certain of its U.S. subsidiaries (the “Guarantors”) entered into a five-year unsecured senior credit facility pursuant to a credit agreement (the “2020 Credit Agreement”) with Bank of America, N.A. acting as administrative agent (the “Administrative Agent”) and a syndicate of lenders. The 2020 Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement includes a senior term loan (the “2020 Term Loan”) of up to $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”). During fiscal 2021, the Company made principal payments totaling $2.5 million on the term loan under the 2017 Credit Agreement (the “2017 Term Loan”). On the closing date of the 2020 Credit Agreement, the Company repaid the remaining principal balance of $97.5 million and concurrently drew $200.0 million under the 2020 Term Loan. the 2017 Term Loan on During fiscal 2021, the Company made principal payments totaling $2.5 million on the 2020 Term 53 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements Loan. Interest paid on the 2017 Term Loan and 2020 Term Loan during fiscal years 2021 and 2020 was $2.1 million and $2.4 million, respectively. Pursuant to the 2020 Credit Agreement, the Company may request one or more additional tranches of term loans or increases to the Revolving Facility, up to an aggregate of $500.0 million and subject to securing additional funding commitments from the existing or new lenders. The Revolving Facility includes a $25.0 million sublimit for the issuance of standby letters of credit and a $10.0 million sublimit for swing line loans. The Credit Facility is available to finance working capital, capital expenditures and other general corporate purposes. Outstanding amounts are due in full on the maturity date of September 29, 2025, subject to scheduled amortization of the 2020 Term Loan principal prior to the maturity date as set forth in the 2020 Credit Agreement. During fiscal 2021, there were no borrowings under the Revolving Facility. At the Company’s option, loans under the 2020 Credit Agreement will bear interest at (i) the Applicable Rate (as defined in the 2020 Credit Agreement) plus the Eurodollar Rate (as defined in the 2020 Credit Agreement) or (ii) the Applicable Rate plus a rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by the Administrative Agent, and (c) the Eurodollar Rate plus 1.0% (the “Base Rate”). All swing line loans will bear interest at a rate equal to the Applicable Rate plus the Base Rate. The Eurodollar Rate is the rate per annum equal to the reserve adjusted London Interbank Offered Rate (or a comparable or successor rate), for dollar deposits for interest periods of one, two, three or six months, as selected by the Company. The Applicable Rate for Eurodollar Rate loans ranges from 1.000% per annum to 1.250% per annum, and the Applicable Rate for Base Rate loans ranges from 0.000% per annum to 0.250% per annum. Undrawn amounts under the Credit Facility are subject to a commitment fee ranging from 0.150% to 0.200%. Interest for Eurodollar Rate loans is payable at the end of each applicable interest period or at three-month intervals if such interest period exceeds three months. Interest for Base Rate loans is payable quarterly in arrears. contains various Agreement The 2020 Credit conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default. As of April 3, 2021, the Company was in compliance with these covenants. 54 The annual maturities of the Term Loan as of April 3, 2021 are as follows (in thousands): Fiscal Year 2022 2023 2024 2025 2026 Maturities $ 5,000 7,500 7,500 10,000 167,500 $197,500 to 103.50% of Senior Notes due 2025 On December 1, 2020, the Company redeemed the remaining $23.4 million principal amount of its 7.00% senior notes due December 1, 2025 (the “2025 Notes”) using cash on hand, at a redemption price equal the principal amount, plus accrued and unpaid interest. In connection with the redemption, the Company recognized a loss on debt extinguishment of $1.0 million as “Other (expense) income, net” in the Consolidated Statement of Income. The loss on debt extinguishment consisted of a $0.8 million redemption premium and a $0.2 million write-off of the debt the unamortized portion of issuance costs. Interest paid on the 2025 Notes during fiscal years 2021, 2020 and 2019 was $1.6 million, $1.6 million and $29.1 million, respectively. Senior Notes due 2026 In fiscal years 2019 and 2018, the Company issued a total of $900.0 million aggregate principal amount of its 5.50% senior notes due July 15, 2026 (the “2026 Notes”). On October 16, 2020, the Company redeemed all of the 2026 Notes at a redemption price equal to 106.363% of the $900.0 million principal amount, plus accrued and unpaid interest. The 2026 Notes were redeemed using proceeds from the issuance of the 2031 Notes (as defined below) combined with cash on hand plus borrowings under the 2020 Term Loan. In connection with the redemption, the Company recognized a debt extinguishment of $61.0 million as “Other (expense) income, net” in the Consolidated Statement of Income. The loss on debt extinguishment $57.3 million redemption premium and a $3.7 million net write-off of unamortized debt issuance costs and bond premium. The primary purpose of the redemption was to reduce future interest expense. consisted loss on of a Interest paid on the 2026 Notes during fiscal years 2021, $37.3 million, $49.5 million and $17.2 million, respectively. 2019 was 2020 and Notes to Consolidated Financial Statements the Company Senior Notes due 2029 issued On September 30, 2019, $350.0 million aggregate principal amount of its 4.375% senior notes due 2029 (the “Initial 2029 Notes”). On December 20, 2019 and June 11, 2020, the Company issued an additional $200.0 million and $300.0 million, respectively, aggregate principal amount of such notes (together, the “Additional 2029 Notes” and collectively with the Initial 2029 Notes, the “2029 Notes”). The 2029 Notes will mature on October 15, 2029, unless earlier redeemed in accordance with their terms. The 2029 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. to supplemental The Initial 2029 Notes were issued pursuant to an indenture, dated as of September 30, 2019, by and among the Company, the Guarantors and MUFG Union Bank, N.A., as trustee, and the Additional 2029 Notes indentures, were issued pursuant dated as of December 20, 2019 and June 11, 2020 indentures, (such collectively, The 2019 Indenture contains customary events of default, including payment default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events and also contains customary negative covenants. supplemental and “2019 Indenture”). indenture the to 100% of At any time prior to October 15, 2024, the Company may redeem all or part of the 2029 Notes, at a redemption price equal their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest. In addition, at any time prior to October 15, 2024, the Company may redeem up to 35% of the original aggregate principal amount of the 2029 Notes with the proceeds of one or more equity offerings, at a redemption price equal to 104.375%, plus accrued and unpaid interest. Furthermore, at any time on or after October 15, 2024, the Company may redeem the 2029 Notes, in whole or in part, at the redemption prices specified in the 2019 Indenture, plus accrued and unpaid interest. Interest is payable on the 2029 Notes on April 15 and October 15 of each year. Interest paid on the 2029 Notes during fiscal 2021 was $31.6 million. the Company Senior Notes due 2031 issued On September 29, 2020, $700.0 million aggregate principal amount of its 3.375% senior notes due 2031 (the “2031 Notes”). The 2031 Notes will mature on April 1, 2031, unless earlier redeemed in accordance with their terms. The 2031 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 to an The 2031 Notes were issued pursuant indenture, dated as of September 29, 2020, by and among the Company, the Guarantors and MUFG Union Bank, N.A., as trustee (the “2020 Indenture”). The 2020 Indenture contains customary events of default, including payment default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events and also contains customary negative covenants. At any time prior to April 1, 2026, the Company may redeem all or part of the 2031 Notes, at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest. In addition, at any time prior to April 1, 2026, the Company may redeem up to 40% of the original aggregate principal amount of the 2031 Notes with the proceeds of one or more equity offerings, at a redemption price equal to interest. accrued 103.375%, Furthermore, at any time on or after April 1, 2026, the Company may redeem the 2031 Notes, in whole or in part, at the redemption prices specified in the 2020 Indenture, plus accrued and unpaid interest. unpaid plus and The 2031 Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and may not be offered or sold in the United States absent an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. Interest is payable on the 2031 Notes on April 1 and October 1 of each year. Interest paid on the 2031 Notes during fiscal 2021 was $11.9 million. Fair Value of Long-Term Debt The Company’s debt is carried at amortized cost and fair value quarterly for disclosure is measured at purposes. The estimated fair value of the 2029 Notes and the 2031 Notes as of April 3, 2021 was $905.3 million and $689.5 million, respectively (compared to a carrying value of $850.0 million and $700.0 million, respectively). The estimated fair value of the 2025 Notes, the 2026 Notes and the 2029 Notes as of March 28, 2020 was $23.9 million, $962.8 million, and $489.5 million, respectively (compared to a carrying value of $23.4 million, $900.0 million, and $550.0 million, respectively). The Company considers its debt to be Level 2 in the fair value hierarchy. Fair values are estimated based on similar quoted market instruments. The 2029 Notes and the 2031 Notes currently trade – and the 2025 Notes and the 2026 Notes previously traded – over the counter and their fair values were estimated based upon the value of their last trade at the end of the period. identical prices for or 55 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements The 2020 Term Loan carries a variable interest rate set at current market rates, and as such, the fair value of the 2020 Term Loan approximated book value as of April 3, 2021. fiscal 2021, the Company Interest Expense During recognized $79.3 million of interest expense primarily related to the 2026 Notes, the 2029 Notes and the 2031 Notes, which was partially offset by $4.1 million of interest capitalized to property and equipment. During fiscal 2020, the Company recognized $66.0 million of interest expense primarily related to the 2026 Notes and the 2029 Notes, which was partially offset by $5.6 million of interest capitalized to property and the Company equipment. During recognized $52.8 million of interest expense primarily related to the senior notes due December 1, 2023 (which were fully retired during fiscal 2019), the 2025 Notes and the 2026 Notes, which was partially offset by $8.8 million of interest capitalized to property and equipment. fiscal 2019, 10. RETIREMENT BENEFIT PLANS and offers differing eligibility Company tax-beneficial Defined Contribution Plans The retirement contribution plans to eligible employees in the U.S. and certain other countries. Eligible employees in certain countries outside of the U.S. are eligible to participate in stakeholder, group or national pension plans with contributory requirements based on local and national regulations. U.S. employees are eligible to participate in the Company’s fully qualified 401(k) plan 30 days after their date of hire. An employee may contribute and invest pretax and/or Roth dollars into the 401(k) plan up to the maximum legal limits (as defined by Federal regulations). Employer contributions to the 401(k) plan are made at the discretion of the Company’s Board of Directors. Employees are immediately vested in their own contributions as well as employer matching contributions. In total, the Company contributed $15.6 million, $14.4 million and $14.0 million to its domestic and foreign defined contribution plans during fiscal years 2021, 2020 and 2019, respectively. program with Defined Benefit Pension Plans The Company maintains two qualified defined benefit pension plans for its subsidiaries located in Germany. the plans is funded through a self-paid One of reinsurance at $3.8 million and $3.6 million as of April 3, 2021 and March 28, 2020, respectively (included in “Other non-current assets” in the Consolidated Balance Sheets). The pension benefit obligations of both plans were $14.0 million and $12.3 million as of April 3, 2021 and March 28, 2020, respectively, which is assets valued 56 included in “Accrued liabilities” and “Other long-term liabilities” in the Consolidated Balance Sheets. The benefit obligations for the plans are calculated annually by an independent actuary and require the use of significant judgement including assumptions based on local economic conditions. The net periodic benefit costs were approximately $0.6 million, $0.6 million and $0.5 million for fiscal years 2021, 2020 and 2019, respectively. The becomes insolvent. that amount the Company’s creditors in the event Non-Qualified Deferred Compensation Plan Certain employees and members of the Board of Directors are eligible to participate in the Company’s Non-Qualified Deferred Compensation Plan (“NQDC Plan”). The NQDC Plan provides eligible participants the opportunity to defer and invest a specified percentage of their cash compensation. The NQDC Plan is a non-qualified plan that is maintained in a rabbi trust, which restricts the Company’s use and access to the assets held, but is subject to the claims the of Company of compensation to be deferred by each participant is based on their own elections and is adjusted for any investment changes that the participant directs. This plan does not provide for employer contributions. The deferred compensation obligation and the fair value of the investments held in the rabbi trust were $32.8 million and $19.4 million as of April 3, 2021 and March 28, 2020, respectively. The current portion of the deferred compensation obligation and fair value of the assets held in the rabbi trust were $1.2 million and $0.9 million as of April 3, 2021 and March 28, 2020, respectively, and are included in “Other current assets” and “Accrued liabilities” in the Consolidated Balance Sheets. The non-current portion of the deferred compensation obligation and fair value of the assets held in the rabbi trust were $31.6 million and $18.5 million as of April 3, 2021 and March 28, 2020, respectively, and are included in “Other non-current assets” and “Other long-term liabilities” in the Consolidated Balance Sheets. 11. COMMITMENTS AND CONTINGENT LIABILITIES purchase Purchase Commitments total Company’s The approximately $419.2 million, a substantial majority of which will be due within the next 12 months. Purchase commitments include payments due for materials and manufacturing services and commitments for the purchase of property and equipment. commitments Lease Commitments See Note 8 for disclosures related to lease commitments. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Legal Matters The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these them to reflect ongoing accruals and adjusts negotiations, settlements, legal counsel and other relevant information. To the extent new information is obtained and the Company’s views suits, outcomes the on assessments, legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determination is made. rulings, advice of investigations or probable claims, of cases, cannot The Company is involved in various legal proceedings and claims that have arisen in the ordinary course of its business that have not been fully adjudicated. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material. In some reasonably the Company estimate a range of loss because there is insufficient information regarding the Company believes there is no more than a remote chance that any liability arising from these matters would be material. Although it is not possible to predict with certainty the outcome of these unresolved legal actions, it is the opinion of management that these actions will not individually or in the aggregate have a material adverse effect on the Company’s consolidated of operations. the matter. However, financial position results or 12. RESTRUCTURING recorded restructuring the During fiscal years 2021, 2020 and 2019, Company related charges totaling approximately $2.7 million, $47.9 million and $50.7 million, to (1) fiscal 2019 actions to reduce operating expenses and improve manufacturing cost structure, (2) fiscal 2018 actions to improve operating efficiencies, and (3) actions resulting from the Business Combination. related primarily respectively, the cost fiscal 2019, improve Company its manufacturing initiated During restructuring actions to reduce operating expenses and structure, including the phased closure of a wafer fabrication facility in Florida and idling production at a wafer these fabrication facility in Texas. As a result of the Company has recorded restructuring actions, cumulative restructuring related charges totaling approximately $93.4 million as of the end of fiscal including accelerated depreciation (to reflect 2021, changes in estimated useful lives of certain property and equipment), impairment charges (to adjust the carrying value of certain property and equipment to reflect its fair value), employee termination benefits and other exit costs. The fair value of the real property was derived based input from upon a market approach with substantial investors, market participants, including brokers, the developers and appraisers. The fair value of personal property was determined using a market approach based upon quoted market prices from auction data for comparable assets. Factors such as age, condition, capacity and manufacturer were considered to adjust the auction price and determine an orderly liquidation value of the personal property assets. The significant inputs related to valuing these assets are classified as Level 2 in the fair value measurement hierarchy. 57 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements The following table summarizes the restructuring charges resulting from the 2019 restructuring event thousands): (in One-time employee termination benefits Contract termination and other associated costs Total One-time employee termination benefits Contract termination and other associated costs Accelerated depreciation Total One-time employee termination benefits Asset impairment and accelerated depreciation Total $ $ $ Cost of Goods Sold Fiscal 2021 Other Operating Expense 161 — $ — 1,189 — $ 1,350 Fiscal 2020 Other Operating Expense — $ 6,013 6,666 — $12,679 Cost of Goods Sold 8,365 26,061 $34,426 Fiscal 2019 Other Operating Expense — $ 7,655 15,901 $23,556 Cost of Goods Sold $ 21,346 $21,346 Total $ 161 1,189 $ 1,350 Total $ 6,013 15,031 26,061 $47,105 Total $ 7,655 37,247 $44,902 The Company expects to record additional expenses of less than $0.1 million for employee termination benefits and other exit costs as a result of these actions. The Company has entered into other individually immaterial restructuring plans. During fiscal years 2021, 2020 and 2019, the Company’s restructuring charges related to these plans were $1.4 million, $0.8 million and $5.8 million, respectively. The following table summarizes the activity related to the Company’s restructuring liabilities for fiscal years 2020 and 2021 (in thousands): Contract Termination and Other Associated Costs $ 1,626 15,519 (1,248) (7,262) (8,365) 270 1,468 (1,409) (167) 162 $ $ Total $ 8,614 47,869 (1,248) (18,811) (34,426) $ 1,998 2,722 (3,615) (167) 938 $ Accelerated Depreciation — $ 26,061 — — (26,061) — — — — — $ $ Accrued restructuring balance as of March 30, 2019 Costs incurred and charged to expense Transfer to right-of-use asset Cash payments Non-cash activity Accrued restructuring balance as of March 28, 2020 Costs incurred and charged to expense Cash payments Non-cash activity Accrued restructuring balance as of April 3, 2021 One-Time Employee Termination Benefits $ 6,988 6,289 — (11,549) — $ 1,728 1,254 (2,206) — 776 $ 58 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 13. INCOME TAXES Income (loss) before income taxes consists of the following components (in thousands): United States Foreign Total 2021 Fiscal Year 2020 $125,362 $(226,005) $(297,975) 389,767 621,094 $807,380 $ 395,089 $ 91,792 682,018 2019 The components of the income tax provision are as follows (in thousands): 2021 Fiscal Year 2020 2019 Current (expense) benefit: Federal State Foreign Deferred benefit (expense): Federal State Foreign Total $(11,043) $ (6,705) $ 17,222 209 (46,267) (28,836) (140) (80,722) (91,905) (93) (65,065) (71,863) (3,771) 57,452 18,136 $(35,545) $ 7,826 $ 55,833 946 4,603 13,390 (1,330) 70,169 11,099 $(73,769) $(60,764) $ 41,333 59 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements A reconciliation of the provision for income taxes to income tax expense computed by applying the statutory federal income tax rate to pre-tax income (loss) for fiscal years 2021, 2020 and 2019 is as follows (dollars in thousands): Income tax expense at statutory federal rate (Increase) decrease resulting from: State (expense)/benefit, net of federal impact Tax credits Effect of changes in income tax rate applied to net deferred tax assets(1) Foreign tax rate difference Foreign permanent differences and related items Change in valuation allowance Expiration of state attributes Stock-based compensation Tax reserve adjustments U.S. tax on foreign earnings, including GILTI & FDII(2) U.S. Transitional Repatriation Tax Intra-entity transfer Permanent reinvestment assertion Acquisition related adjustments Other income tax (expense) benefit 2021 Fiscal Year 2020 2019 Amount Percentage Amount Percentage Amount Percentage $(169,550) 21.0% $(82,969) 21.0% $(19,276) 21.0% (743) 92,532 0.1 (11.5) 22,286 85,851 (2.8) (10.6) 9,026 (1,232) (1,656) 9,545 (9,979) (100,830) — — (8,488) (919) 388 (1.1) 0.2 0.2 (1.2) 1.2 12.5 — — 1.1 0.1 (0.1) 2,605 64,017 (2,269) 75,247 (5,446) 6,438 (5,165) (1,707) (13,973) (81,916) — — (6,814) (7,257) (1,555) (0.7) (16.2) 0.6 (19.0) 1.4 (1.6) 1.3 0.4 3.5 20.8 — — 1.7 1.8 0.4 710 69,856 12,972 41,672 6,825 2,353 — (7,694) 5,213 (76,215) 1,897 3,935 — — (915) (0.8) (76.1) (14.1) (45.4) (7.4) (2.6) — 8.4 (5.7) 83.0 (2.1) (4.3) — — 1.1 $ (73,769) 9.1% $(60,764) 15.4% $ 41,333 (45.0)% (1) In fiscal 2021, the Company completed the restructuring of the Cavendish intellectual property. A portion of this transaction is deductible in future periods at a rate higher than the applicable fiscal 2021 tax rate in Singapore. As a result, the Company recognized an income tax benefit of $22.1 million due to the favorable rate differential associated with this transaction. In fiscal 2019, the Company completed its analysis of the impact of the Tax Cuts and Jobs Act in accordance with Staff Accounting Bulletin No. 118 and recognized a $15.1 million tax benefit due to an increase in U.S. deferred tax assets. (2) The Global Intangible Low-Taxed Income (“GILTI”) and Foreign-Derived Intangible Income (“FDII”) provisions became effective for the Company in fiscal 2019, at which time the Company elected to treat taxes due on future GILTI inclusions in U.S. taxable income as current-period expense (the “period cost method”). Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis used for income tax purposes. The deferred income tax assets and liabilities are measured in each taxing jurisdiction using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. 60 Notes to Consolidated Financial Statements Significant components of the Company’s net deferred income taxes are as follows (in thousands): Deferred income tax assets: Inventory reserve Equity compensation Net operating loss carry-forwards April 3, 2021 March 28, 2020 $ 9,632 $ 10,114 14,444 24,474 18,817 71,928 Research and other credits 106,825 106,958 Employee benefits Lease liabilities Other deferred assets 19,357 15,947 12,606 16,456 8,662 3,559 Total deferred income tax assets 199,341 240,438 Valuation allowance (36,512) (35,280) Total deferred income tax assets, net of valuation allowance $ 162,829 $ 205,158 Deferred income tax liabilities: Amortization and purchase accounting basis difference $ (25,553) $(107,517) Accumulated depreciation/basis difference (59,756) (59,356) Accrued tax on unremitted foreign earnings (21,747) (15,521) Deferred intercompany revenue(1) (22,284) — Right-of-use assets (14,663) (14,400) Other deferred liabilities (1,681) (1,955) Total deferred income tax liabilities (145,684) (198,749) Net deferred income tax asset $ 17,145 $ 6,409 Amounts included in the Consolidated Balance Sheets: Other non-current assets $ 59,056 $ 45,754 Other long-term liabilities (41,911) (39,345) Net deferred income tax asset $ 17,145 $ 6,409 (1) In fiscal 2021, the Company completed the intercompany restructuring of the Cavendish intellectual property. Due to revenue recognized by the this transaction, a portion of intercompany seller is taxable in future periods and a corresponding deferred tax liability has been recorded. The Company has recorded a valuation allowance against certain U.S. and foreign deferred tax assets as of April 3, 2021 and March 28, 2020. These valuation allowances upon management’s opinion that it is more likely than not (a likelihood of more than 50 percent) that the benefit of these deferred tax assets may not be realized. established based were The valuation allowance against deferred tax assets increased by approximately $1.2 million in fiscal Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 2021. The increase was comprised of a $2.1 million increase in the valuation allowance against certain domestic deferred tax assets for net operating losses and credits and a $0.9 million decrease for the valuation allowance against deferred tax assets for net operating losses at foreign subsidiaries. At the end of fiscal 2021, a $2.9 million valuation allowance remained foreign deferred subsidiaries and a $33.6 million valuation allowance remained against domestic deferred tax assets. against assets at The valuation allowance against deferred tax assets decreased by $5.2 million in fiscal 2020. The decrease was comprised of a $7.9 million decrease in the valuation allowance against state deferred tax assets for net operating losses and tax credits and a $2.7 million increase for the valuation allowance against deferred tax assets for net operating losses at foreign subsidiaries. At fiscal 2020, a $3.8 million valuation allowance remained against deferred tax assets at foreign subsidiaries and a $31.5 million valuation allowance remained against state deferred tax assets. the end of The valuation allowance against deferred tax assets decreased by $2.4 million in fiscal 2019. The decrease was comprised of a $1.5 million decrease in the valuation allowance against state deferred tax assets for net operating losses and tax credits, a the valuation allowance $0.9 million decrease for against deferred tax assets for net operating losses at foreign subsidiaries. At fiscal 2019, a $1.1 million valuation allowance remained against foreign subsidiaries and a deferred tax assets at $39.3 million valuation allowance remained against state deferred tax assets. the end of As of April 3, 2021, the Company had federal loss carryovers of approximately $28.5 million that expire in fiscal years 2022 to 2041 if unused and state losses of approximately $139.9 million that expire in fiscal years 2022 to 2041 if unused. Federal research credits of $150.7 million, and state credits of $65.0 million expire in fiscal years 2030 to 2041 and 2022 to 2041, respectively. The Company had foreign losses of $115.8 million, which expire in fiscal years 2022 to 2031 if unused. Included in the amounts foreign losses and above are $22.1 million of $0.5 million of tax credits related to acquisitions in the current year. The utilization of acquired domestic assets is subject limitations as required under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and similar state income tax provisions. to certain annual 61 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements in its increase investments The Company has continued to expand its operations and numerous international jurisdictions. These activities expose the Company to taxation in multiple foreign jurisdictions. As a result, management has concluded that it is not its permanently reinvested on certain earnings of foreign subsidiaries which have been subject to U.S. federal the Company’s untaxed foreign earnings and historic investments will continue to be permanently reinvested to fund working capital requirements and operations abroad. It is not practical to estimate the additional tax that would be incurred, if any, if the remainder of the permanently reinvested earnings were repatriated. taxation. The remainder of The Company has foreign subsidiaries with tax holiday agreements in Singapore and Costa Rica. These tax holiday agreements have varying rates and expire in December 2021 and December 2027, respectively. Incentives from these countries are subject to the Company meeting certain employment and investment requirements. Relative to the statutory tax rate, income tax expense decreased by $74.3 million (an impact of approximately $0.65 and $0.64 per basic and diluted share, respectively) in fiscal 2021 and $62.9 million (an impact of approximately $0.54 and $0.53 per basic and diluted share, respectively) in fiscal 2020 as a result of these agreements. The Company’s gross unrecognized tax benefits totaled $134.1 million as of April 3, 2021, $119.2 million as of March 28, 2020, and $103.2 million as of March 30, 2019. Of these federal benefit of amounts, $128.7 million (net of state taxes), $114.8 million (net of federal benefit of state taxes) and $99.1 million (net of federal benefit of state taxes) as of April 3, 2021, March 28, 2020, and March 30, 2019, the if amounts of unrecognized tax benefits that, recognized, would impact the effective tax rate in each of the fiscal years. respectively, represent The Company’s gross unrecognized tax benefits increased from $119.2 million as of March 28, 2020 to $134.1 million as of April 3, 2021, primarily due to increases related to current year tax positions, the effect of provision-to-return adjustments on prior year business positions, combinations purchase accounting. related part recognized increases to of and as 62 A reconciliation of fiscal 2019 through fiscal 2021 beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): 2021 Fiscal Year 2020 2019 Beginning balance $119,222 $103,178 $122,823 Additions based on positions related to current year Additions for tax positions in prior years Reductions for tax positions in prior years Expiration of statute of limitations Settlements 10,048 10,357 7,193 6,240 6,484 8,369 (348) (69) (24,932) (1,094) — (728) — (6,972) (3,303) Ending balance $134,068 $119,222 $103,178 It is the Company’s policy to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. During fiscal years 2021, 2020 and 2019, the Company recognized $0.8 million, $0.7 million and $(0.2) million, respectively, of interest and penalties related to uncertain tax positions. Accrued interest and penalties totaled related $6.2 million, $5.4 million and $4.4 million as of April 3, 2021, March 28, 2020 and March 30, 2019, respectively. unrecognized benefits tax to The unrecognized tax benefits of $134.1 million and accrued interest and penalties of $6.2 million at the end of fiscal 2021 are recorded on the Consolidated Balance Sheet as a $21.2 million other long-term liability, with the balance reducing the carrying value of the gross deferred tax assets. The Company currently believes it is reasonably possible that $2.2 million of gross unrecognized tax benefits, and $5.3 million of associated accrued interest and penalties will be recognized for positions taken in prior years within the next 12 months due to the expiration of statute of is not reasonably possible to estimate other amounts by which unrecognized tax benefits may increase or decrease within the next 12 months due to uncertainties regarding the timing of examinations and the amount of settlements that may be paid, if any, to tax authorities. limitations. It Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 taxes taxes payable receivable of $86.7 million and Income $50.8 million as of April 3, 2021 and March 28, respectively, are included in “Other current 2020, in the Consolidated Balance Sheets. liabilities” Income and $5.4 million as of April 3, 2021 and March 28, 2020, respectively, are included in “Other current assets” in the Consolidated Balance Sheets. Long-term income taxes payable of $5.4 million and $5.6 million as of respectively, April 3, 2021 and March 28, 2020, which relates to the Transitional Repatriation Tax that the Company has elected to pay over eight years, is of $3.5 million included in “Other Consolidated Balance Sheets. long-term liabilities” in the in and state federal Qorvo files a consolidated U.S. income tax return, as well as separate and combined income tax international numerous returns jurisdictions. Qorvo’s fiscal 2018 U.S. federal and state tax returns and subsequent tax years remain open for examination, as well as all attributes brought forward into those years. The Company is also subject to examination by various international tax authorities. The tax to examination vary by jurisdiction. years subject 14. NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data): 2021 Fiscal Year 2020 2019 Numerator: Numerator for basic and diluted net income per share — net income available to common stockholders $733,611 $334,325 $133,125 Denominator: Denominator for basic net income per share — weighted average shares 114,034 117,007 124,534 Effect of dilutive securities: Stock-based awards Denominator for diluted net income per share — adjusted weighted average shares and assumed conversions Basic net income per share Diluted net income per share 1,982 2,286 2,822 116,016 119,293 127,356 $ $ 6.43 $ 2.86 $ 6.32 $ 2.80 $ 1.07 1.05 In the computation of diluted net income per share for fiscal years 2021, 2020 and 2019, approximately 0.1 million shares, 0.1 million shares and 0.3 million shares, respectively, were excluded because the effect of their inclusion would have been anti-dilutive. 15. STOCK-BASED COMPENSATION Summary of Stock Plans 2003 Stock Incentive Plan — RF Micro Devices, Inc. The 2003 Stock Incentive Plan (the “2003 Plan”) was approved by the Company’s stockholders on July 22, 2003, and the Company was permitted to grant stock options and other types of equity incentive awards, such as stock appreciation rights, restricted stock awards, performance shares and performance units, under the 2003 Plan. No further awards can be granted under this plan. 2009 and 2012 Incentive Plans — TriQuint Semiconductor, Inc. Effective the Business Combination, the Company assumed the TriQuint, Inc. closing upon the of 2009 Incentive Plan and TriQuint, Inc. 2012 Incentive Plan (the “TriQuint Incentive Plans”), originally adopted by TriQuint. The TriQuint Incentive Plans provided for the grant of stock options, restricted stock units, stock appreciation rights and other stock or cash awards to employees, officers, directors, consultants, agents, advisors and independent contractors of TriQuint and its subsidiaries and affiliates. The options granted thereunder were required to have an exercise price per share no less than 100% of the fair market value per share on the date of grant. The terms of each grant under the TriQuint Incentive Plans could not exceed ten years. No further awards can be granted under these plans. 63 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements in rights, connection 2012 Stock Incentive Plan — Qorvo, Inc. The Company currently grants stock options and restricted stock units to employees and directors the 2012 Stock Incentive Plan (the “2012 under Plan”), which was approved by the Company’s stockholders on August 16, 2012, assumed by the the Company Business with Combination and reapproved by the Company’s stockholders on August 8, 2017 for purposes of Section 162(m) of the Code. Under the 2012 Plan, the Company is permitted to grant stock options and other types of equity incentive awards, such as stock appreciation awards, performance shares and performance units. The maximum number of shares issuable under the 2012 Plan may not exceed the sum of (a) 4.3 million shares, plus (b) any shares of common stock (i) remaining available for issuance as of the effective date of the 2012 Plan under the Company’s prior plans and (ii) subject to an award granted under a prior plan, which awards are forfeited, canceled, terminated, expire or lapse for any reason. As of April 3, 2021, 2.7 million shares were available for issuance under the 2012 Plan. The aggregate number of shares subject to performance-based restricted stock units awarded for fiscal 2021 under the 2012 Plan was 0.2 million shares. restricted stock of the upon closing agents, advisors the grant of stock options, 2013 Incentive Plan — Qorvo, Inc. Effective the Business Combination, the Company assumed the TriQuint, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”), originally adopted by TriQuint, allowing Qorvo to issue awards under this plan. The 2013 Incentive Plan replaces the TriQuint 2012 Incentive Plan and provides for restricted stock units, stock appreciation rights and other stock or cash awards to employees, officers, directors, consultants, independent contractors of TriQuint and its subsidiaries and to the Business affiliates who were such prior the Combination or who become employed by Company or the the closing of its affiliates after Business Combination. Former employees, officers and directors of RFMD are not eligible for awards under the 2013 Incentive Plan. The options granted thereunder must have an exercise price per share no less than 100% of the fair market value per share on the date of grant. The terms of each grant under the 2013 Incentive Plan may not exceed ten years. As of April 3, 2021, 0.9 million shares were available for issuance under the 2013 Incentive Plan. and 2015 Inducement Stock Plan — Qorvo, Inc. The 2015 Inducement Stock Plan (the “2015 Inducement Plan”) provides for the grant of equity 64 inducement to awards to persons as a material become employees of the Company or its affiliates. The plan provides for the grant of stock options, restricted stock units, stock appreciation rights and other stock-based awards. The maximum number of shares issuable under the 2015 Inducement Plan may not exceed the sum of (a) 0.3 million shares, plus (b) any shares of common stock (i) remaining available for issuance as of the effective date of the 2015 the TriQuint 2008 Inducement Stock Plan under Inducement Award Plan and (ii) subject to an award granted under the TriQuint 2008 Inducement Award Plan, canceled, are terminated, expire or lapse for any reason. No awards were made under the 2015 Inducement Plan in fiscal years 2021, 2020 and 2019. As of April 3, 2021, 0.3 million shares were available for issuance under the 2015 Inducement Plan. forfeited, awards which regular Employee Stock Purchase Plan — Qorvo, Inc. Effective upon closing of the Business Combination, the Company assumed the TriQuint Employee Stock Purchase Plan (“ESPP”), which is intended to qualify as an “employee stock purchase plan” under Section 423 of full-time the Code. All employees of the Company (including officers) and all other employees who meet the eligibility requirements of the plan may participate in the ESPP. The ESPP provides eligible employees an opportunity to acquire the Company’s common stock at 85.0% of the lower the Company’s of common stock on the first or last day of each six-month purchase period. At April 3, 2021, 3.3 million shares were available for future issuance under this plan. The Company makes no cash contributions to the ESPP, but bears the expenses of its administration. The Company issued 0.4 million shares under the ESPP in fiscal 2021 and 0.5 million shares in fiscal years 2020 and 2019. the closing price per share of For fiscal years 2021, 2020 and 2019, the primary stock-based awards and their general terms and conditions are as follows: Restricted stock units granted by the Company in fiscal years 2021, 2020 and 2019 are either service-based or performance and service-based. Service-based restricted stock units generally vest over a four-year period from the grant date. Performance and service- based restricted stock units are earned based on Company performance of stated metrics during the fiscal year and, if earned, generally vest one-half when earned and the balance over two years. Restricted stock units granted to non-employee directors generally vest over a one-year period from the grant date. In fiscal 2021, each non-employee director was eligible to receive an annual grant of restricted stock units. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 to the officer subject executing The options and restricted stock units granted to certain officers of the Company generally will, in the event of the officer’s termination other than for cause and certain agreements in favor of the Company, continue to vest pursuant to the same vesting schedule as if the officer had remained an employee of the Company and, as a result, these awards are expensed at grant date. In fiscal of $27.4 million was recognized upon the grant of 0.2 million restricted share units to certain officers of the Company. compensation stock-based 2021, Stock-Based Compensation Under ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award using an option pricing model for stock options (Black-Scholes) and market price for restricted stock units, and is recognized as expense over the employee’s requisite service period. ASC 718 covers a wide range of stock-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights and employee stock purchase plans. Total pre-tax stock-based compensation expense recognized in the Consolidated Statements of Income was $89.3 million, $76.0 million and $71.6 million, for fiscal years 2021, 2020 and 2019, respectively, net of expense capitalized into inventory. A summary of activity with respect to stock options under the Company’s director and employee stock plans follows: Weighted- Average Remaining Contractual Term (in years) Weighted- Average Exercise Price Aggregate Intrinsic Value (in thousands) Options (in thousands) Outstanding as of March 28, 2020 Granted Exercised Canceled Forfeited Outstanding as 967 $18.11 — (503) (6) — — $18.88 $22.13 — of April 3, 2021 458 $17.21 1.64 $80,465 Vested and expected to vest as of April 3, 2021 Options exercisable as of April 3, 2021 458 $17.21 1.64 $80,465 458 $17.21 1.64 $80,465 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $192.90 as of April 1, 2021 (the last Nasdaq trading day prior to the fiscal year end on April 3, 2021), that would have been received by the option holders had all option holders with in-the-money options exercised their options as of that date. As of April 3, 2021, there was no remaining unearned compensation cost related to unvested option awards. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model based on the expected volatility, dividend yield, term and risk-free interest rate. There were no options granted during fiscal years 2021, 2020 and 2019. The total intrinsic value of options exercised during fiscal years 2021, 2020 and 2019 was $66.7 million, $65.1 million and $37.9 million, respectively. Cash received from the exercise of stock options and from participation in the employee stock purchase plan (excluding accrued unremitted employee funds) was approximately $40.9 million for fiscal 2021 and is reflected in cash flows from financing activities in the Consolidated Statements The Company settles employee stock options with newly issued shares of the Company’s common stock. of Cash Flows. if actual ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods from those estimates. Based upon historical pre-vesting forfeiture the Company assumed an annualized experience, forfeiture rate of 1.4% for both stock options and restricted stock units. forfeitures differ A summary of activity with respect to restricted stock unit awards (“RSUs”) under the Company’s director and employee stock plans follows: RSUs (in thousands) Weighted-Average Grant-Date Fair Value Balance at March 28, 2020 2,091 Granted Vested Forfeited 799 (965) (66) $ 72.59 125.43 70.07 86.02 Balance at April 3, 2021 1,859 $ 93.22 total remaining unearned As of April 3, 2021, related to unvested restricted compensation cost stock units was $103.7 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. 65 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Notes to Consolidated Financial Statements The total intrinsic value of restricted stock units that vested during fiscal years 2021, 2020 and 2019 was $121.8 million, $67.7 million and $77.5 million, respectively, based upon the fair market value of the Company’s common stock on the vesting date. 16. STOCKHOLDERS’ EQUITY Stock Repurchase On October 31, 2019, the Company announced that its Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of the Company’s outstanding common stock, which included approximately $117.0 million authorized under a prior program which was terminated concurrent with this authorization. Under this program, share repurchases were made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The number and timing of shares repurchased depended on general market conditions, regulatory investment opportunities and other considerations. The program did not require the Company to repurchase a minimum number of shares and did not have a fixed term. requirements, alternative repurchased 3.6 million shares, The Company 6.4 million shares and 9.1 million shares of its common stock during fiscal years 2021, 2020 and 2019, of $515.1 million, $515.1 million and $638.1 million, respectively. See Note 18 for further information about our share repurchase program. respectively, aggregate cost an at Common Stock Reserved For Future Issuance At April 3, 2021, the Company had reserved a total of authorized approximately 9.4 million 405.0 million shares of common stock for future issuance as follows (in thousands): its of Outstanding stock options under formal directors’ and employees’ stock option plans Possible future issuance under Company stock incentive plans Employee stock purchase plan Restricted stock-based units outstanding Total shares reserved 3,866 3,257 1,859 9,440 17. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION The Company’s operating and reportable segments as of April 3, 2021 are MP and IDP based on the organizational structure and information reviewed by the Company’s Chief Executive Officer, who is the Company’s chief operating decision maker (“CODM”), and these segments are managed separately based on the end markets and applications they support. The the CODM allocates resources assesses and 66 performance of each operating segment primarily based on operating income. MP is a global supplier of cellular, UWB and Wi-Fi solutions for a variety of applications, including smartphones, wearables, laptops, tablets and IoT. IDP is a global supplier of RF, system-on-a-chip and power management solutions for applications in wireless infrastructure, defense, Wi-Fi, smart home, automotive and IoT. The “All other” category includes operating expenses such as stock-based compensation, amortization of intangible assets, acquisition and integration related costs, restructuring related charges, start-up costs, asset impairment and accelerated depreciation, (loss) gain on assets, and other miscellaneous corporate overhead expenses that the Company does not allocate to its reportable segments because these expenses are not included in the segment operating performance measures evaluated by the Company’s CODM. The CODM does not evaluate operating information. The segments using discrete asset record do segments operating Company’s intercompany revenue. The Company does not allocate gains and losses from equity investments, interest and other (expense) income, or taxes to operating segments. Except as discussed above regarding the the Company’s accounting “All other” policies for segment reporting are the same as for the Company as a whole. category, not The following tables present details of the Company’s a operating reconciliation (in thousands): segments other” reportable “All the and category and of 2021 Fiscal Year 2020 2019 MP IDP $2,856,813 $2,397,740 $2,197,660 1,158,494 841,401 892,665 Total revenue $4,015,307 $3,239,141 $3,090,325 Operating income (loss): MP IDP $1,008,171 $ 715,514 $ 558,990 283,507 145,295 267,304 All other (385,051) (437,593) (609,828) Operating income $ 906,627 $ 423,216 $ 216,466 Interest expense $ (75,198) $ (60,392) $ (43,963) Other (expense) income, net Income before (24,049) 32,265 (80,711) income taxes $ 807,380 $ 395,089 $ 91,792 458 Revenue: Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2021 Reconciliation of “All other” category: Stock-based compensation expense Amortization of intangible assets Acquisition and integration related costs Restructuring related charges Start-up costs Asset impairment and accelerated depreciation Other (including (loss) gain on assets and other miscellaneous corporate overhead) Loss from operations for “All other” 2021 Fiscal Year 2020 2019 $ (89,322) $ (75,978) $ (71,580) (453,515) (246,563) (61,891) (8,522) (13,467) (21,808) (18,035) (712) (37,246) (27,118) (7,463) (3,523) (252,137) (32,946) (2,722) (1,731) — (6,193) $(385,051) $(437,593) $(609,828) The consolidated financial statements include revenue to are geographic by summarized as follows (in thousands): customers region that 2021 Fiscal Year 2020 2019 Revenue: United States China Other Asia Taiwan Europe $1,631,110 1,579,017 363,523 248,708 192,949 $1,468,358 1,106,679 340,400 169,337 154,367 $1,379,528 1,094,061 271,797 188,745 156,194 Total Revenue $4,015,307 $3,239,141 $3,090,325 the customer During the first quarter of fiscal 2020, the Company changed its presentation of net revenue based on the “sold to” address of to the above presentation of net revenue based on the location of the customers’ headquarters. The information above for fiscal 2019 has been reclassified to reflect this change. The Company believes that the disaggregation of revenue based on the location of the customers’ headquarters is more representative of how its revenue by flows geographically-sensitive changes in economic factors. impacted cash and are The consolidated financial statements include the following long-lived tangible asset amounts related to operations of the Company by geographic region (in thousands): April 3, 2021 March 28, 2020 Long-lived tangible assets: United States China Other countries $1,011,686 $1,042,587 166,524 50,092 200,346 53,999 18. SUBSEQUENT EVENTS in MEMS-based sensing solutions, NextInput, Inc. Acquisition On April 5, 2021, the Company acquired all of the Inc., a outstanding equity interests of NextInput, leader for cash consideration of approximately $173.2 million. The acquisition expands the Company’s offerings of MEMS-based products for mobile applications and provides solution opportunities for a broad range of applications in other markets. comprehensive sensing new program, Share Repurchase Program On May 5, 2021, the Company announced that its Board of Directors authorized a new share repurchase the program to repurchase up to $2.0 billion of Company’s outstanding common stock, which includes approximately $236.9 million authorized under the prior program terminated concurrent with the new authorization. Under share this repurchases will be made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchases will depend on general market conditions, regulatory requirements, and alternative other considerations. The program does not require the Company to repurchase a minimum number of shares, does not have a fixed term, and may be modified, suspended or terminated at any time without prior notice. opportunities investment 67 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Qorvo, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Qorvo, Inc. and subsidiaries (the Company) as of April 3, 2021 and March 28, 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 3, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 3, 2021 and March 28, 2020, and the results of its operations and its cash flows for each of the three years in the period ended April 3, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of April 3, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 24, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. 68 Inventory—Valuation Description of the Matter How We Addressed the Matter in Our Audit the Company assesses the valuation of all The Company’s inventory, net totaled $507.8 million as of April 3, 2021, representing approximately 7% of total assets. As explained in Note 1 to the consolidated financial statements, inventories including manufacturing raw materials, work-in-process, and finished goods each reporting period. Obsolete inventory or inventory in excess of management’s estimated demand forecasts is written down to its estimated net realizable value if less than cost by recording an inventory reserve at each reporting period. Auditing management’s estimates for inventory reserves involved subjective auditor judgment because the assessment considers a number of factors, including estimated customer demand forecasts, technological obsolescence risks, and possible alternative uses that are affected at least partially by market and economic conditions outside the Company’s control. We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s inventory reserve process. This included testing controls over management’s review of the assumptions and data underlying the inventory reserves, such as demand forecasts and consideration of how factors outside of the Company’s control might affect the valuation of obsolete and excess inventory. Our audit procedures included, among others, evaluating the significant assumptions (e.g., customer demand forecasts, technological and/or market obsolescence, and possible alternative uses) and the accuracy and completeness of underlying data used in management’s assessment of inventory reserves. We evaluated inventory levels compared to forecasted demand, historical sales and specific product considerations. We also assessed the historical accuracy of management’s estimates for both the forecast assumptions and the reserve estimate. We have served as the Company’s auditor since 2018. Raleigh, North Carolina May 24, 2021 /s/ Ernst & Young LLP 69 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Qorvo, Inc. Opinion on Internal Control over Financial Reporting We have audited Qorvo, Inc. and subsidiaries’ internal control over financial reporting as of April 3, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations In our opinion, Qorvo, Inc. and subsidiaries of the Treadway Commission (2013 framework) (the COSO criteria). (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 3, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 3, 2021 and March 28, 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 3, 2021, and the related notes and our report dated May 24, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or the company’s assets that could have a material effect on the financial statements. timely detection of unauthorized acquisition, use, or disposition of its inherent Because of reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. internal control over limitations, financial /s/ Ernst & Young LLP Raleigh, North Carolina May 24, 2021 70 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. ITEM 9A. CONTROLS AND PROCEDURES. (a) Evaluation of disclosure controls and procedures Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. required disclosure. regarding our communicated accumulated and to the controls disclosure Company’s As of the end of the period covered by this report, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that and procedures were effective, as of such date, to enable the Company to record, process, summarize and report in a timely manner the information that the Company is required to disclose in its Exchange Act reports. Our Chief Executive Officer and Chief Financial Officer also concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, in ensuring that information required to be disclosed by the Company in the reports that the Exchange Act is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. files or submits under it (b) Management’s assessment of internal control over financial reporting of The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the financial effectiveness reporting as defined in Rules 13a-15(f) and 15d-15(f) under internal control over financial reporting is a process designed by and under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by our board of the Exchange Act. Our internal control over for the preparation internal those reporting financial and statements directors, management and other personnel, to provide reasonable assurance regarding the reliability of of financial external consolidated purposes in accordance with U.S. generally accepted control over accounting principles. Our financial and policies includes reporting procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements. Management assessed the effectiveness of our internal control over financial reporting as of April 3, 2021. Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). issued by the Company’s internal control over Based on this assessment, management concluded that financial reporting was effective as of April 3, 2021, based on the Control-Integrated Framework (2013) issued by the COSO. Internal criteria the in Ernst & Young LLP, an independent registered public accounting firm, has issued an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting, as of April 3, 2021, which is included in this Annual Report on Form 10-K under Part and Supplementary Data.” Statements “Financial Item 8 II, (c) Changes in internal control over financial reporting financial There were no changes in our Company’s internal control over reporting during the quarter ended April 3, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Information required by this Item may be found in our for our 2021 Annual definitive proxy statement captions under Stockholders Meeting the Officers,” “Executive Governance,” “Corporate “Proposal 1 — Election of Directors” and “Delinquent of 71 Section 16(a) Reports” reported therein), and the information therein is incorporated herein by reference. (to the extent The Company has adopted its “Code of Business Conduct and Ethics,” and a copy is posted on the Company’s website at www.qorvo.com, on the “Corporate Governance” tab under the “Investor Relations” page. In the event that we amend any of the provisions of the Code of Business Conduct and Ethics that requires disclosure under applicable law, SEC rules or Nasdaq listing standards, we intend to disclose such amendment on our website. Any waiver of the Code of Business Conduct and Ethics for any executive officer or director must be approved by the Board and will be promptly disclosed, along with the reasons for the waiver, as required by applicable law or Nasdaq rules. ITEM 11. EXECUTIVE COMPENSATION. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Information required by this Item may be found in our definitive proxy statement for our 2021 Annual Meeting of Stockholders under the captions “Related Person Transactions” and “Corporate Governance,” and the information therein is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Information required by this Item may be found in our definitive proxy statement for our 2021 Annual Meeting of Stockholders under the captions “Proposal 4 — Ratification of Appointment of Independent Registered Public Accounting Firm” and “Corporate Governance,” and the information therein is incorporated herein by reference. Information required by this Item may be found in our for our 2021 Annual definitive proxy statement Meeting of Stockholders under the captions “Executive Committee Compensation” the Interlocks and by information reference. Participation,” incorporated and Insider is “Compensation and herein therein ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Information required by this Item may be found in our definitive proxy statement for our 2021 Annual Meeting of Stockholders under the captions “Security and Ownership Plan Management” Information,” is incorporated herein by reference. Beneficial Owners Compensation “Equity the information and and Certain therein of 72 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as part of this report: (1) Financial Statements i. Consolidated Balance Sheets as of April 3, 2021 and March 28, 2020. ii. Consolidated Statements of Income for fiscal years 2021, 2020 and 2019. iii. Consolidated Statements of Comprehensive Income for fiscal years 2021, 2020 and 2019. iv. Consolidated Statements of Stockholders’ Equity for fiscal years 2021, 2020 and 2019. v. Consolidated Statements of Cash Flows for fiscal years 2021, 2020 and 2019. vi. Notes to Consolidated Financial Statements. Reports of Independent Registered Public Accounting Firm. (2) The financial statement schedules are not included in this item as they are either included within the consolidated financial statements or the notes thereto in this Annual Report on Form 10-K or are inapplicable and, therefore, have been omitted. (3) The exhibits listed in the accompanying Exhibit Index are filed as a part of this Annual Report on Form 10-K. (b) Exhibits. See the Exhibit Index. (c) Separate Financial Statements and Schedules. None. ITEM 16. FORM 10-K SUMMARY. None. 73 Exhibit No. 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 EXHIBIT INDEX Description Amended and Restated Certificate of Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on February 3, 2015) Incorporation of Qorvo, Amended and Restated Bylaws of Qorvo, Inc., effective as of May 13, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 19, 2016) Specimen Certificate of Common Stock of Qorvo, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2015) Indenture, dated as of September 30, 2019, among Qorvo, Inc., the Guarantors party thereto and Wells Fargo Bank, National Association, as Successor Trustee to MUFG Union Bank, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 1, 2019) Supplemental Indenture, dated as of December 20, 2019, among Qorvo, Inc., the Guarantors party thereto and Wells Fargo Bank, National Association, as Successor Trustee to MUFG Union Bank, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 20, 2019) Second Supplemental Indenture, dated as of June 11, 2020, among Qorvo, Inc., the Guarantors party thereto and Wells Fargo Bank, National Association, as Successor Trustee to MUFG Union Bank, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 11, 2020) Indenture, dated as of September 29, 2020, among Qorvo, Inc., the Guarantors and Wells Fargo Bank, National Association, as Successor Trustee to MUFG Union Bank, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2020) Description of Securities (incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 10-K filed with the SEC on May 17, 2019) Qorvo, Inc. 2007 Employee Stock Purchase Plan (As Assumed and Amended by Qorvo, Inc., and as further amended, effective February 8, 2017) (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed with the SEC on May 23, 2017)* Qorvo, Inc. 2013 Incentive Plan (As Assumed and Amended by Qorvo, Inc.) (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201357))* Qorvo, Inc. 2012 Incentive Plan (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201357))* Qorvo, Inc. 2009 Incentive Plan (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.4 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201357))* Qorvo, Inc. 2008 Inducement Program (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.5 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201357))* Qorvo, Inc. 1996 Stock Incentive Program (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.6 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201357))* Qorvo, Inc. 2012 Stock Incentive Plan (As Assumed by Qorvo, Inc. and Amended and Restated Effective January 1, 2015) (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))* 2003 Stock Incentive Plan of Qorvo, Inc. (As Assumed and Amended by Qorvo, Inc. Effective January 1, 2015) (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))* Qorvo, Inc. 2006 Directors Stock Option Plan (As Assumed by Qorvo, Inc. and Amended Effective January 1, 2015) (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))* 10.10 Nonemployee Directors’ Stock Option Plan of Qorvo, Inc. (As Assumed by Qorvo, Inc. and Amended Effective January 1, 2015) (incorporated by reference to Exhibit 99.4 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))* 74 Exhibit No. 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 Description Qorvo, Inc. 2015 Inducement Stock Plan (incorporated by reference to Exhibit 99.5 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))* Inc. Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Qorvo, Company’s Current Report on Form 8-K filed with the SEC on January 5, 2015)* Qorvo, Inc. Form of Change in Control Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 10, 2015)* Qorvo, Inc. Nonqualified Deferred Compensation Plan (As Assumed and Amended and Restated Effective January 1, 2015) (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2015)* Qorvo, Inc. Cash Bonus Plan (As Assumed and Amended and Restated Effective January 1, 2015) (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2015)* Employment Agreement, dated as of November 12, 2008, between RF Micro Devices, Inc. and Robert A. Bruggeworth (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 10.1 to RFMD’s Current Report on Form 8-K filed with the SEC on November 14, 2008 (File No. 000-22511))* Wafer Supply Agreement, dated June 9, 2012, between RF Micro Devices, Inc. (incorporated by reference to Exhibit 10.1 to RFMD’s Quarterly Report on Form 10-Q/A filed with the SEC on January 3, 2013 (File No. 000-22511)) Inc. and IQE, Form of Stock Option Agreement (Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)* Form of Restricted Stock Unit Agreement (Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)* Form of Restricted Stock Unit Agreement (Performance-Based and Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)* Form of Restricted Stock Unit Agreement (Performance-Based Award for Senior Officers (TSR)) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)* Qorvo, Inc. Severance Benefits Plan and Summary Plan Description (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)* Form of Stock Option Agreement (Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Agreement (Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Agreement (Performance-Based and Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Agreement (Performance-Based Award for Senior Officers (TSR)) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Award Agreement (Director Annual/Supplemental RSU) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Award Agreement (deferral election) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)* (Director Annual/Supplemental RSUs) Qorvo, Inc. Cash Bonus Plan (As Amended and Restated Through June 9, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2016)* Qorvo, Inc. Director Compensation Program, effective August 3, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2016)* 75 Exhibit No. 10.31 10.32 10.33 10.34 10.35 10.36 Description Qorvo, Inc. Short-Term Incentive Plan (As Amended and Restated Through May 11, 2017) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2017)* 2018 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, effective as of April 1, 2018 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K filed with the SEC on May 21, 2018)* Second 2018 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, dated as of October 8, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on February 7, 2019)* 2019 Declaration of Amendment to Qorvo, Inc. 2007 Employee Stock Purchase Plan, dated as of October 30, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 30, 2020)* 2019 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, dated as of October 30, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 30, 2020)* Amended and Restated Credit Agreement, dated as of September 29, 2020, by and among Qorvo, Inc., as the Borrower, certain subsidiaries of the Borrower identified therein, as the Guarantors, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, and Wells Fargo Bank, National Association, Citibank, N.A., TD Bank, National Association, MUFG Bank, Ltd., PNC Bank, National Association, Bank of the West and Morgan Stanley Bank, N.A., as Co-Syndication Agents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2020) 10.37 2020 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, dated as of December 17, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on February 4, 2021)* 10.38 2021 Declaration of Amendment to Qorvo, Inc. 2007 Employee Stock Purchase Plan* 21 22 23.1 31.1 31.2 32.1 32.2 101 Subsidiaries of Qorvo, Inc. List of Subsidiary Guarantors Consent of Independent Registered Public Accounting Firm Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Periodic Report by Mark J. Murphy, as Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Periodic Report by Mark J. Murphy, as Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The following materials from our Annual Report on Form 10-K for the fiscal year ended April 3, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of April 3, 2021 and March 28, 2020, (ii) the Consolidated Statements of Income for the fiscal years ended April 3, 2021, March 28, 2020, March 30, 2019, (iii) the Consolidated Statements of Comprehensive Income for the fiscal years ended April 3, 2021, March 28, 2020, March 30, 2019, (iv) the Consolidated Statements of Stockholders’ Equity for the fiscal years ended April 3, 2021, March 28, 2020, March 30, 2019, (v) the Consolidated Statements of Cash Flows for the fiscal years ended April 3, 2021, March 28, 2020, March 30, 2019, and (vi) the Notes to Consolidated Financial Statements. 104 The cover page from our Annual Report on Form 10-K for the year ended April 3, 2021, formatted in iXBRL * Executive compensation plan or agreement Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 001-36801. The SEC file number for RFMD is 000-22511. 76 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: May 24, 2021 QORVO, INC. By: /S/ ROBERT A. BRUGGEWORTH Robert A. Bruggeworth President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert A. Bruggeworth and Mark J. Murphy and each of them, as true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all which said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on May 24, 2021. /S/ ROBERT A. BRUGGEWORTH Name: Robert A. Bruggeworth Title: President, Chief Executive Officer and Director (Principal Executive Officer) /S/ MARK J. MURPHY Name: Mark J. Murphy Title: Chief Financial Officer (Principal Financial Officer) /S/ GINA B. HARRISON Name: Gina B. Harrison Title: Vice President and Corporate Controller (Principal Accounting Officer) /S/ RALPH G. QUINSEY Name: Ralph G. Quinsey Title: Chairman of the Board of Directors /S/ JUDY BRUNER Name: Judy Bruner Title: Director /S/ JEFFERY R. GARDNER Name: Jeffery R. Gardner Title: Director /S/ JOHN R. HARDING Name: John R. Harding Title: Director /S/ DAVID H. Y. HO Name: David H. Y. Ho Title: Director /S/ RODERICK D. NELSON Name: Roderick D. Nelson Title: Director /S/ DR. WALDEN C. RHINES Name: Dr. Walden C. Rhines Title: Director /S/ SUSAN L. SPRADLEY Name: Susan L. Spradley Title: Director /S/ WALTER H. WILKINSON, JR. Name: Walter H. Wilkinson, Jr. Title: Director 77 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] 

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