Qorvo
Annual Report 2022

Plain-text annual report

FY22 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 2, 2022 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) Securities registered pursuant to Section 12(b) of the Act: Trading Symbol(s) QRVO Title of each class Common Stock, $0.0001 par value 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 $18,621,370,109 as of October 2, 2021. 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, 2022, there were 106,027,384 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 2022 annual meeting of stockholders, which is expected to be filed within 120 days after the end of the registrant’s fiscal year ended April 2, 2022. QORVO, INC. FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 2, 2022 TABLE OF CONTENTS 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. PART I PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. [Reserved] Item 6. 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 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 22 23 23 23 23 25 26 35 37 70 70 70 70 71 71 71 71 71 72 72 73 76 In this Annual Report on Form 10-K, the words “Qorvo,” “we,” “our,” “ours” and “us” refer only to Qorvo, Inc. and its subsidiaries and not any other person or entity. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Forward-Looking Information some These “expect,” “should,” “believe,” “estimate,” of Operations.” This Annual Report on Form 10-K contains forward- looking statements within the meaning of the federal securities laws, particularly in Item 1: “Business,” Item 1A: “Risk Factors” and Item 7: “Management’s Discussion and Analysis of Financial Condition and forward-looking Results 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,” “plan,” “could,” “anticipate,” “forecast,” “predict,” “potential,” “continue” and similar words, although are forward-looking statements expressed concerning future business, prospects, results of operations, financial condition or research and development or technology investments; new or enhanced products, services or technologies; emerging industries or business models; design wins or product launches; industry, market or technology trends, dynamics or transitions, such as the transition to 5G; potential the COVID-19 pandemic, legal or regulatory matters, U.S./ in Ukraine, or national China trade, security our customers; statements regarding matters that are not historical are also forward-looking statements. differently. future matters integration other such as our competition; the conflict Additionally, impacts of statements tensions; vertical and by reflect Although forward-looking statements in this Annual Report the good faith judgment of our management, such statements can only be based on facts and factors currently known and understood by us. Consequently, forward-looking statements involve inherent risks and uncertainties, and actual financial results and outcomes may differ materially and adversely from the results and outcomes discussed in or anticipated by the forward-looking statements. Material factors that could cause actual results to differ materially from our expectations are summarized and disclosed under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report. Readers are cautioned to review carefully and consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our results of operations business, and prospects. financial condition, Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 PART I ITEM 1. BUSINESS. Company Overview Qorvo® is a global leader in the development and commercialization of technologies and products for wireless, wired and power markets. laptops, 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”), Wi-Fi and other wireless including solutions for a variety of applications, smartphones, wearables, tablets and the Internet of Things (“IoT”). IDP is a global supplier of radio frequency (“RF”), system-on-a-chip (“SoC”) and power management solutions for a wide range of markets, including cellular and IT infrastructure, automotive, renewable energy, defense 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 and end markets. Our design expertise and manufacturing capabilities span multiple process technologies. Our primary wafer fabrication facilities are in North Carolina, Oregon and Texas. Our primary assembly and test facilities are in China, Costa Rica, Germany and Texas. We also source products and materials through external suppliers. We other manufacturing facilities throughout Asia, Europe and North America. design, sales have and of assets acquisition businesses, In addition to organic growth, our strategy may include the and technologies that allow us to complement our existing product offerings and design capabilities to drive growth in new or existing markets. During fiscal 2022, we acquired United Silicon Carbide, (“United SiC”), a provider of silicon carbide (“SiC”) power products, and NextInput, Inc. (“NextInput”), a provider of microelectromechanical system (“MEMS”)-based sensing products. Inc. and data form factors, traffic throughput and efficiency. At Industry Trends, Markets and Products Global demand for wireless and wired connectivity, supported by the proliferation of smarter, data-driven, connected devices in a variety of is raising increasing network requirements for the initiatives and same time, global environmental technology advancements related to energy efficiency, sustainability and conservation are driving investments across industrial applications that demand maximum power efficiency, including in electric vehicles (“EVs”) and renewable energy systems. These trends support multiyear technology upgrade cycles in our markets and increase the demand for our technologies and products. consumer range and of a 3 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Our business is diversified primarily across the following end markets: mobile devices, cellular base stations, power management and conversion, wireless connectivity, defense and aerospace, automotive To solve our connectivity and other markets. power-related customers’ most enhance performance, challenges, improve efficiency, reduce complexity, enable smaller form factors and address other critical challenges. increase functionality, critical RF products and our Mobile Devices Qorvo’s largest market is mobile devices, which is a It global market characterized by large volumes. tablets includes smartphones, wearables, and other devices. laptops, Advances in mobile devices have transformed how end users around the world access content, interact with their physical and virtual communities and transact commerce. Mobile devices are migrating to 5G architectures and technologies which increase data throughput, reduce signal latency and enable massive machine-to-machine connectivity. 5G devices operate over a wide range of frequencies and face challenges related to efficiency, linearity, signal coexistence, signal integrity and form factor. 5G architectures are more complex and include Multiple-Input/Multiple- higher secondary Output frequencies with wider bandwidths and new receive paths featuring carrier aggregation. In each instance, the increased functionality and greater complexity increase RF content and favor high performance and highly integrated solutions. (“MIMO”), transmit, Mobile device original equipment manufacturers (“OEMs”) are adopting UWB technology to enhance functionality, including indoor navigation and secure leveraging UWB’s precision-location remote access, accuracy. They are also seeking to adopt force-sensing touch sensor technology to enhance human-machine touch interfaces, create new consumer experiences and advance industrial design. amplifiers, multiplexers Qorvo’s products for mobile devices include highly integrated RF solutions which incorporate filters, switches, other components in a single package. Our product portfolio also includes RF power management integrated circuits, UWB SoC and system-in-package (“SiP”) solutions, MEMS-based sensors, antenna tuners, antennaplexers, as well as discrete multiplexers, duplexers, filters, and switches. and Cellular Base Stations Operators of cellular base stations are migrating to 5G in order to increase capacity, expand coverage and lower the cost per bit of data delivered. This is enabling new data-driven intelligent applications that combine artificial intelligence and machine learning capabilities. New robotics, use cases include industrial automation, hyper-connectivity with global 4 remote medical care, autonomous vehicles and augmented reality/virtual reality (“AR/VR”). factors. 5G networks operate over a wide range of frequencies, and deployments can vary with spectrum allocation, regional demographics, geopolitical considerations the completion of In the U.S., and other C-band auctions signaled the start of significant growth for base stations in the sub-7 GHz frequency range. Many of these base stations will be configured with massive MIMO active antenna arrays which increase the number of RF transmit and receive channels. Base stations operating over millimeter wave frequencies are also being deployed to address the high-density requirements environments and improve applications such as fixed wireless access. capacity in The continuing migration to 5G is increasing the content opportunity for Qorvo’s high-performance infrastructure products, including those featuring our gallium nitride (“GaN”), gallium arsenide (“GaAs”) and bulk acoustic wave (“BAW”) technologies. Qorvo supports the world’s leading cellular base station OEMs with a broad portfolio of infrastructure solutions to address requirements for increased data capacity and throughput and improved efficiency. Qorvo’s products for cellular base stations include switch-low noise amplifier variable gain (“LNA”) modules, amplifiers, integrated power amplifier (“PA”) Doherty modules, discrete LNAs and high power GaN amplifiers. is a core requirement Power Management and Conversion Power efficiency in all electronics, and power management and power conversion are critical to enhancing efficiency. Industry trends in EVs/hybrid-EVs, renewable energy systems, portable devices, EV chargers/ battery-operated on-board chargers, data storage, circuit protection and similar applications, are sharpening the focus on power efficiency and increasing the demand for our power management and power conversion solutions. Qorvo’s SiC power devices provide state-of-the-art efficiency in a range of power conversion applications. Our SiC portfolio includes Schottky diodes and transistors ranging in voltage from 650V to 1700V. Power levels vary from 650 watts to hundreds of kilowatts, and markets include automotive, industrial, IT infrastructure and renewable energy. solutions power management include Qorvo’s programmable power management integrated circuits (“ICs”) and power application controllers (PACs®). Our programmable provide power management customers digital and analog power control. They improve system reduce solution size, reliability product development time. Our power management products manage voltages from 1.8V to 600V and power up to 4,000 watts. lower cost, our customers’ shorten and ICs Wireless Connectivity The proliferation of data-driven connected devices that sense, process and communicate is increasing demand for wireless connectivity solutions that improve speed, capacity and efficiency. Use cases in consumer, commercial and industrial IoT applications include connected cars, cloud gaming, AR/VR, telemedicine and factory automation. Each benefit from faster throughput, lower latency, more security, greater reliability and smaller form factors. IoT connected devices allow remote access and control of various functions, including entertainment, comfort, security, energy usage and health or general status monitoring, in home and office environments. These devices can be controlled through a computer, tablet or smartphone, or through a more direct peer-to-peer device such as a voice-enabled remote control. In Wi-Fi, new standards feature higher order MIMO architectures and offer greater range and capacity. The adoption of new standards, such as 802.11ax (Wi-Fi 6), Wi-Fi 6E and Wi-Fi 7, increases data throughput and enable new use cases. In the U.S., the Federal Communications Commission approved the use of 5.9 GHz to 7.1 GHz spectrum for Wi-Fi 6E, and countries outside the U.S. are also making spectrum available for Wi-Fi 6E. The upcoming Wi-Fi 7 standard will double the channel bandwidth and number of spatial streams available with Wi-Fi 6E and use multi-link operation to combine portions of the 5 GHz and 6 GHz bands into a single link. This will enable faster speeds over longer distances than previous standards. As standards and architectures evolve, requirements increase for more functional and more highly integrated RF front end solutions. Qorvo’s Wi-Fi portfolio includes PAs, switches, LNAs and BAW filters, as well as integrated solutions including front end modules (“FEMs”) and integrated FEMs. In lower power applications, smart device OEMs increasingly prefer multi-protocol integrated SoCs that enable multiple radios to connect concurrently. The coexistence of low power wireless protocols, such as Bluetooth Low Energy, Zigbee, and Thread, in single- placement SoCs reduces form factor, extends battery IoT devices. life and advances the proliferation of Similarly, Matter is an open and universal smart home protocol accelerate interoperability across IoT devices and platforms. Lastly, new use cases leveraging the ultra-precise location accuracy and secure access enabled by UWB are advancing the proliferation of UWB in a widening range of applications. expected simplify and to These trends are increasing demand for Qorvo’s low power wireless and UWB solutions. Qorvo offers multi- standard (Bluetooth Low Energy, Zigbee and Thread) SoC solutions and single standard UWB SoC and SiP solutions, consisting of SoC hardware, firmware and application software. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 the shift Defense and Aerospace Within the defense and aerospace markets, we focus primarily on high-power phased array radar, electronic military applications and communications systems. The trend toward phased array radar, to frequencies and the sharing of existing higher frequency bands with cellular communications are expanding the content opportunity for Qorvo’s high- performance defense RF technologies and solutions. 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. Our power amplifiers support phased array radars and communication systems. Our solid-state, high-power products provide highly reliable, efficient broadband solutions for complex applications across a broad frequency spectrum. Our premium filters optimize frequency spectrum to expand network capacity and extend coverage. We also offer industry-leading standard products and integrated multi-chip modules such as LNAs, mixers, phase shifters, switches, multiplexers and attenuators. and compute technologies. Automotive Connectivity The automotive industry continues to adopt advanced connectivity Next- generation wireless technologies are enabling new use cases in automotive wireless connectivity, including vehicle-to-everything (“V2X”) applications that enable direct, high-speed communication. These new use cases require complex RF solutions supporting a range of wireless technologies, including cellular, Wi-Fi, GPS, satellite radio and UWB. UWB enables more secure access than current technologies, helping to prevent so-called “man-in-the-middle” or “relay” attacks. We provide a variety of automotive RF connectivity products, including BAW filters, LNAs, switches, PAs and front-end solutions as well as UWB SoC solutions. Our products meet or exceed automotive AEC-Q100 quality and reliability standards, and our customers include the leading automotive OEMs, tier-1 suppliers and chipset vendors. compete in which we Other Markets include Other markets broadband cable and biotechnology In broadband cable, our DOCSIS solutions increase bandwidth to the home to optimize upstream and downstream data biotechnology connectivity. testing, we have developed a proprietary BAW-based diagnostic test platform which received an Emergency Use Authorization from the U.S. Food and Drug Administration in fiscal 2022. testing. In 5 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 key customers, which Research and Development in research and development (“R&D”) to We invest develop advanced technologies and products to best serve our markets. Our R&D activities support large competitive design win opportunities for major programs best-in-class at performance, size, cost and functional density. We also invest in R&D to develop new products for broader market applications. Our R&D efforts require us to focus on both continuous improvement and innovation in software, fundamental semiconductor process technologies, simulation and modeling, systems architecture, circuit design, device packaging, module integration and test. including materials, require areas 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 source technologies in cooperation with key suppliers, including for switches and tuners, silicon on insulator (“SOI”) silicon amplifiers, complementary metal oxide semiconductor (“CMOS”) for power management devices and SoC solutions, MEMS technology for switches and force-sensing and SiC for high voltage power conversion devices. We combine these technologies with proprietary design methods, intellectual property (“IP”) and other expertise to improve performance, increase integration and reduce the size and cost of our products. germanium (“SiGe”) for and qualify develop advanced packaging We improve technologies to reduce component size, 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 and Manufacturing We purchase numerous raw materials and parts, such as silicon, passive components and substrates, for our manufacturing processes. In our GaN and GaAs manufacturing operations, we use several raw materials, including GaN on SiC wafers and GaAs wafers. In our acoustic filter manufacturing operations, raw materials include silicon, lithium niobate and lithium tantalate. We procure our materials, parts and supplies from a large number of sources through established purchase contracts with suppliers or on a purchase order basis. As the semiconductor industry continued to experience supply constraints for certain items during fiscal 2022, we have entered into certain supply agreements to address short- and long-term supply requirements. 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 6 services are available from multiple sources and geographic locations. 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 and are manufactured internally or sourced from outside supply chain partners. components other that GaN, GaAs, SAW and We operate fabrication facilities for the production of BAW, Temperature Compensated SAW wafers in North Carolina, Oregon and Texas. We also use multiple silicon-based process including SOI, SiGe and bulk CMOS, technologies, 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 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 products, based on a number of including 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 internal manufacturing facilities require a high Our 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, Our manufacturing facilities worldwide are certified to the International Organization for Standardization (“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 continuous ISO 9001 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 incorporates self-audits. specific internal focus, and The upon aerospace industry. ISO 14001 is an internationally environmental agreed management system. We require that all of our key vendors and suppliers be compliant with applicable standards. standard 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 33% and 30% of total revenue in fiscal years 2022 and 2021, respectively. Samsung Electronics Co., Ltd. (“Samsung”) accounted for 11% and 7% of total revenue in fiscal years 2022 and 2021, respectively. These customers primarily purchase RF solutions for a variety of mobile devices. Sales and Marketing We sell our products worldwide both directly to customers and through a network of U.S. and foreign sales representative firms and distributors. We select our sales representatives based on technical skills and sales experience, the presence of complementary lines and the customer base served. We product training about our provide ongoing educational products 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, external support internal sales and our for to 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 chipset suppliers and provide them strong technical support to enhance their customer experience and help anticipate future product needs. Seasonality Our sales are the result of standard purchase orders or specific agreements with customers. Our revenue fluctuates based on consumer demand for devices as well as the timing of customer device launches. Other factors such as macroeconomic effects and the timing of the next generation of technologies can also impact the fluctuations in demand. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 introductions. Our customers’ product Competition We operate in a competitive industry generally characterized by rapid advances in technology and new product life 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 customer’s particular requirements. The selection 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. and Inc.; MP competes primarily with Broadcom Inc.; Murata Manufacturing Co., Ltd.; NXP Semiconductors N.V.; Qualcomm Technologies, Skyworks Solutions, IDP competes primarily with Analog Inc. Devices, Inc.; Broadcom Inc.; Infineon Technologies AG; MACOM Technology Solutions Inc.; Murata Manufacturing Co., Ltd.; Nordic Semiconductor; NXP Semiconductors N.V.; ON Semiconductor Corporation; Inc.; Silicon Laboratories Qualcomm Technologies, Inc.; Skyworks Solutions, Inc.; STMicroelectronics N.V.; Sumitomo Electric Device Innovations; and Wolfspeed, Inc. 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 monitor and protect our global IP rights to deter unauthorized use of our IP and other assets. These efforts can be difficult because of the absence of consistent In addition, the laws of some foreign countries do not protect IP rights to the same extent as U.S. laws. We respect the IP rights of others and have implemented policies and procedures to mitigate the risk of infringing or misappropriating third-party IP. international standards and laws. Patent applications are filed within the U.S. and in other countries where we have a market presence. On occasion, some applications do not mature into patents for including rejections based on prior art. We have approximately 2,200 patents that expire from 2022 to 2041. We also continue to acquire patents through acquisitions or various reasons, 7 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 the and comparative 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 pace development of 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. 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, confidentiality we 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. As of April 2, 2022, we employed over 8,900 full and part-time employees in 22 countries. By region, approximately 57% of our total employees were in the Americas, 37% in Europe. Approximately 60% of our global population was in engineering or technician roles. and 6% in Asia Competitive Pay and Benefits We provide compensation and benefits 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 awards, an employee stock purchase plan, retirement programs, health savings and flexible spending family care accounts, paid time off, resources, employee assistance programs, tuition assistance, health and wellness benefits and programs, and on-site fitness centers. We benchmark our compensation and benefits packages annually to ensure we remain competitive with our peers and continue to attract and retain talent throughout our organization. family leave, schedules, flexible work 8 Employee Recruitment, Retention and Development retaining, We are committed to recruiting, hiring, 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 for our internship program. We believe that our commitment to our internship program and university partnerships contributes to developing the next generation of including engineers in our industry, and provides a pipeline of talent pool. We recent college graduates into our offered internship opportunities during the last two fiscal years that enabled us to continue building our talent pipeline despite the COVID-19 pandemic. remote talent, hybrid both and We support a high-performance culture through learning and development solutions aligned with our strategic priorities. We offer e-learning libraries and on-demand training that provide our employees with real-time learning opportunities to help them achieve their career goals, build management skills and lead their organizations. We believe our competitive compensation and benefits programs, along with career growth and development opportunities promote longer employee tenure and reduce turnover. We monitor employee turnover rates as our success depends upon retaining and investing in our worldwide talent. Our global attrition rate has consistently been below the technology industry average. and inclusion. advocate groups for called Qorvo Diversity, Equity and Inclusion At Qorvo, we value diversity, equity and inclusion and respect the unique talents, experiences, cultures and ideas of our global team members. Diversity and inclusion principles are threaded across the entire company, and employees are equipped with the knowledge and capabilities to welcome and embrace Through diversity employee-driven Employee Networks, our employees have an opportunity to connect through shared interests and goals and spur growth personal professional development. Our efforts to foster a diverse and inclusive with organizations in our surrounding communities that advocate ethnicity, socioeconomic, disability and LGBTQ+ equality. These and other efforts help promote an inclusive workplace employee talented of engagement. employees partnering workplace through gender, include drive race and and and for Safety, Health and Wellness We are a member of the Responsible Business Alliance (“RBA”), an industry coalition dedicated to driving sustainable value for workers in global supply chains, among other things. As a member of the RBA, we have adopted the RBA Code of Conduct, which that working to establishes conditions are safe, that employees are treated with standards ensure respect and dignity, and that business operations are environmentally responsible and conducted ethically. The RBA Code of Conduct has been reflected in our employee policies and procedures. for provide training prioritize conditions safe working We our employees as well as our on-site contractors and visitors. We are committed to an injury-free workplace and and dedicated workplace leadership support to reduce or eliminate health and safety risks. In response to the COVID-19 pandemic, we instituted comprehensive safety protocols for all Qorvo facilities. We successfully transitioned a considerable number of our employees to work from home, and we invested in additional wellness benefits, including reimbursement programs to help employees improve home workspaces. In fiscal 2022, we achieved our safety goal for the fourth consecutive year, while providing a safe working environment for our many essential workers on-site through the COVID-19 pandemic. As we make plans to transition to return to the office, we will provide our employees with work arrangements that support flexibility, while maintaining innovation, collaboration, openness and camaraderie, in addition to a safe working environment for our employees. culture strong our of The success of our business is fundamentally connected to the well-being of our employees. We provide our employees and their families access to a variety of health and wellness programs that support their physical and mental health. These programs provide tools and resources that emphasize preventive care, encourage healthy behaviors, such as health coaches and wellness incentives, and are designed to help cultivate a productive work environment, while also focusing on the well-being of our employees. Government Regulations We are subject to a variety of extensive and changing domestic and international federal, state and local governmental laws, regulations and ordinances related to the discharge of pollutants into the environment; the treatment, transport, and disposal of hazardous waste; recycling and product packaging; worker health and the environment, our workforce, and the management of our manufacturing operations. activities affecting safety; other and We continuously improve the environmental aspects of our manufacturing processes and are dedicated to: ‰ providing a safe and healthy work environment for our employees; ‰ complying with regulatory and other requirements; ‰ using natural efficiently; resources, energy, and materials ‰ substituting sustainable resources in place of non-renewable resources; ‰ reusing or recycling materials wherever technically possible and economically reasonable; ‰ minimizing waste and disposing of waste safely and responsibly; ‰ sourcing raw material responsibly; and Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 ‰ implementing specific measures to prevent and minimize hazards to humans and the environment including pollution prevention. For our products We believe that our operations and facilities comply in respects with applicable environmental all material laws and worker health and safety laws, and our efforts help to ensure that our products are compliant with the requirements of the markets into which the products will be sold and with our customers’ are example, requirements. compliant with the European Union RoHS Directive (2011/65/EU on the Restriction of Use of Hazardous 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. We are an ISO 14001:2015 a comprehensive Environmental Management System the (“EMS”) 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. in place to help ensure control of manufacturer certified with 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 business. These controls, regulations, and 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, 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. Cybersecurity Qorvo’s cybersecurity program is built around the ISO and National Institute for Standards and Technology frameworks. Cybersecurity risks are routinely identified in the Qorvo Enterprise Risk Management Program and cybersecurity assessment and planning. Senior management and the Audit Committee of the Board of Directors receives regular briefings on cybersecurity matters. Qorvo’s cybersecurity program includes, but is not limited to: ‰ annual cybersecurity budget planning across all information technology disciplines; ‰ enterprise security policies and procedures that guide our protection strategy; ‰ a combination of broad cybersecurity training (all specific employees) and targeted training sensitive roles and functions; for 9 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 ‰ prioritization of system and process criticality to apply enhanced security protections to the most business-critical areas of the company; ‰ reviewing and continually monitoring the security posture of critical third parties (e.g., suppliers and service providers); ‰ exercising Qorvo’s incidents through incident response exercises and root cause analysis of actual and near-miss incidents; preparedness for ‰ integration of in-house cybersecurity services with third-party security service providers; and ‰ regular internal and external cybersecurity audits and the Audit assessments, at Committee of the Board of Directors. direction the of Access to Public Information We make available, free of charge through our website (https://www.qorvo.com), our annual and quarterly reports on Forms 10-K and 10-Q (including exhibits and 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 SEC maintains a website at https://www.sec.gov that contains reports, other proxy information regarding issuers that file electronically with the SEC. The public may also request a copy of our forms filed with the SEC, without charge upon written request, directed to: statements, information and and 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 or considered to be a part of this Annual Report on Form 10-K. 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. as our 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 and dependent achieving customers’ requirements can change rapidly and product life cycles can be short. developing wins new products on design ‰ We depend on several large customers for a substantial portion of our revenue and the loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations. ‰ 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 may be subject to continued volatility and uncertainty worldwide economies and financial markets resulting from the ongoing impact of the COVID-19 pandemic. customer demand, ‰ 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 purchase materials and 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 chipset suppliers, and our inability to effectively manage evolving relationships with these companies may have an adverse effect on our business. or maintain ‰ We are subject to risks from international sales and our in operations. ‰ We may not be able to generate sufficient cash to service all of our debt 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. 10 ‰ Our acquisitions and other strategic investments financial or strategic could fail objectives, disrupt our ongoing business, and adversely impact our results of operations. to achieve our ‰ 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, expose us to liability or disrupt our ability to operate critical business functions, 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 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 and macroeconomic changes, including trade restrictions and recession or slowing growth in the semiconductor industry and the overall global economy; reasons, our ‰ political and/or civil unrest, acts of war or other military actions, including any resulting sanctions or other restrictive actions; ‰ changes in consumer confidence caused by many factors, including changes in interest rates, credit levels, energy or other markets, unemployment commodity prices as well as changes in existing and expected rates of inflation; ‰ fluctuations in demand for our customers’ products; ‰ our ability to forecast our customers’ demand for our products accurately; ‰ the ability of third-party foundries and other third- party suppliers to manufacture, assemble and test our products and otherwise deliver on their commitments to us 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; ‰ delays in the widespread deployment of commercial 5G networks or in consumer adoption of 5G-enabled devices; ‰ our ability to achieve cost savings and improve yields and margins on our new and existing products; that Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 ‰ our ability to successfully integrate into our business, and realize the expected benefits of, our acquisitions and strategic investments; and ‰ our ability to utilize our capacity efficiently or to acquire additional capacity in response to customer demand. Our operating results have been and 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 customers’ requirements can change rapidly and product life cycles can be short. 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. 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 involve multiple opportunities Most that we major pursue 11 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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, 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 and the loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations. 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 44%, 39% and 43% of our revenue for fiscal years 2022, 2021 and 2020, 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 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 government-sponsored 12 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. We may be subject to continued volatility and uncertainty in customer demand, worldwide economies and financial markets resulting from the ongoing impact of the COVID-19 pandemic. The COVID-19 pandemic has caused government authorities to implement numerous public health measures, including quarantines, business closures, travel bans and lockdowns to contain the virus. We have to experience disruptions to our business as these measures have, and may continue to have, an effect on our customer demand and operations. experienced continue expect and to of the the industry in and demand, (including customer financial markets. We The COVID-19 pandemic recent COVID-19 lockdowns in China) has been a contributing factor supply semiconductor constraints and may continue to cause volatility and worldwide uncertainty economies have experience, experienced, and may disruptions to our supply chain and increased costs in with connection of materials, components, logistics services and other services caused in part by the pandemic. To date, any negative impact of COVID-19 on the overall demand for our products, cash flows from operations, need for capital liquidity position has been expenditures and our limited, capacity are although we constraints in our supply chain. addressing continue sources our to practices (including employee The spread of COVID-19 caused us to modify our business travel, employee work locations, and cancellation of events and conferences), and we may reinstitute these and 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 and its variants impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread its severity, and the actions to of the pandemic, its contain the virus or impact. immunize against or treat 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 cost increases. Furthermore, the COVID-19 pandemic and related supply chain disruptions and labor market constraints have created heightened risk that external suppliers may be unable to meet their obligations to us. If we experience any significant difficulty in obtaining the materials or services used in the conduct of our business, these supply challenges may limit our ability to fully satisfy customer demand. supply achieve commitments, As the semiconductor industry continued to experience supply constraints for certain items during fiscal 2022, we have entered into certain supply agreements to address short- and long-term supply requirements. However, even with supply agreements, we are still subject to risks that a supplier will be unable to meet its anticipated manufacturing yields, produce wafers on a timely basis, or provide additional wafer capacity beyond its current contractual commitments sufficient to meet our supply needs. If so, we may experience delays in product launches or supply shortages for certain products, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships. if a supplier experiences financial difficulties or goes into bankruptcy, it could be difficult or impossible, or may require substantial time and expense, for us to recover any or all of our fees and deposits made as part of any supply agreement. In addition, to us to be Although our key suppliers commit compliant with applicable ISO 9001 and/or TS-16949 quality standards, we have experienced quality and 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 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 incumbent and 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 distributors’ technical support Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 to and other financial incentives distributors may compete with our products, and we may need to the provide 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 increase expenses, and weaken our reduce sales, competitive position. We face risks associated with the operation of our manufacturing facilities. We operate wafer fabrication facilities in North 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, associated with our operations; regulatory 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, including but not limited to, COVID-19. Business disruptions could harm our business, lead to a decline in revenues and increase our costs. Our worldwide operations and business could be, and in some cases have been, disrupted by natural cybersecurity disasters, accidents, industrial 13 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 incidents, telecommunications failures, power or water shortages, extreme weather conditions, public health issues (including the COVID-19 pandemic), terrorist attacks, political and/or civil unrest, acts of war or other military actions, 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 resume operations and could also have a fully 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 or suppliers cannot timely resume their own operations due to a business disruption, natural disaster or catastrophic event, customers may reduce or cancel their orders and suppliers may delay manufacturing and delivery of our products, which may adversely affect our results of operations. from these events could for their exact specifications If we experience poor manufacturing yields, our operating results may suffer. Our products have unique designs and are fabricated using multiple process technologies 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 quality, performance and reliability. Our manufacturing yield is a combination of yields across the entire supply chain, including wafer fabrication, assembly and test yields. in an assembled Defects in a single component 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. Furthermore, as our customers test our products once assembled into their products, we may be exposed to additional quality issues and costs. 14 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 reworked; ‰ 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. We are subject to inventory risks and costs because we purchase materials and 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 purchase materials and start manufacturing certain products in advance of receiving purchase orders based on forecasts provided by these customers. However, these forecasts do not represent binding purchase commitments and we do not recognize sales for these products until they are shipped to or consumed by the customer. As a result, we incur significant inventory and manufacturing costs in advance of anticipated sales. For example, amidst ongoing industry-wide supply constraints, we entered into a capacity reservation agreement with a foundry supplier during the second quarter ended October 2, 2021. Under the agreement we are required to purchase, and the supplier is required to supply, a certain number of wafers for calendar years 2022 the Notes to through 2025. See Note 11 of Consolidated Financial Statements for additional information. Because demand for our products may not materialize, or may be lower than expected, purchasing materials and 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 when our customers purchase indirectly through 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 chipset suppliers, and our inability to effectively manage or maintain our evolving relationships with these companies may have an adverse effect on our business. Chipset suppliers are typically large companies that provide system reference designs for OEMs and ODMs that include the chipset supplier’s baseband and other complementary products. A chipset supplier may own or control IP that gives it a strong market position for its baseband products for interface standards, which provides it with significant influence and control over sales of RF products for these standards. Chipset suppliers 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 chipset supplier’s system reference design. This market dynamic has evolved as chipset suppliers have worked to develop more fully include their own RF integrated solutions that technologies and components. certain air if they offer Chipset suppliers 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 chipset suppliers 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 the design, we are at a distinct competitive disadvantage with OEMs and ODMs that are seeking a 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 chipset suppliers 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. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 In addition to our integrated circuits and modules. 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 and recover to manufacturing costs. development, engineering The Many of our existing and potential competitors have entrenched market positions, historical affiliations with OEMs, considerable internal manufacturing capacity, technological established IP rights and substantial capabilities. 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 financial, technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors. semiconductor 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, future which makes 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 these future demand patterns. 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 lives of underutilized assets or shorten the useful depreciation, and assets accelerate 15 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 which would increase our expenses. For example, to in the third address manufacturing overcapacity, 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 fiscal 2021, we temporarily idled a BAW manufacturing facility in Texas. These actions resulted in impairment charges, other restructuring related charges and expenses. depreciation accelerated and 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 current equity securities that would dilute our stockholders’ ownership, incur substantial debt or financial obligations or assume contingent other liabilities. Such actions could harm our results of the price of our common stock. operations or 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; ‰ 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 operations and of 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; 16 ‰ 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 retain qualified employees, continue to develop leaders for key business units and functions, expand our presence in international locations and adapt to cultural norms of foreign locations and train and motivate our employee base. Labor is further subject to external including our factors that are beyond our control, industry’s highly competitive market for skilled workers and leaders, cost inflation, the COVID-19 pandemic and workforce participation rates. Our future operating 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 The competition for attract qualified personnel. qualified personnel is intense, and the number of people with experience, particularly in RF engineering, integrated circuit and filter software engineering, is design, and technical marketing and support, 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 visas and other travel could restrictions on international to effectively manage our make it more difficult 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 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 and product recalls could materially and adversely 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 the Notes to Consolidated Financial Note 13 of 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; in expenses not deductible for tax ‰ changes in available tax credits; and ‰ 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 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Changes in the favorable tax status of our subsidiaries in Costa Rica and Singapore would have an adverse impact on our operating results. Our subsidiaries in Costa Rica and Singapore have been granted tax holidays that minimize our tax expense and that are expected to be effective through December 2027 and December 2031, 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. and other 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 legislation their tax rules with the Organisation for international 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- transfer pricing documentation rules, border nexus-based tax incentive practices, allocating greater taxing rights to countries where customers are located, and establishing a minimum tax on global interpretations and income. Legislative changes, 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 tax uncertainty, 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. guidance align tax, to We are subject to risks associated with environmental, health and safety regulations, including those related to 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 17 regulations could Risks Related to Our International Sales and Operations Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 future laws or these existing or result in: ‰ regulatory penalties and fines; ‰ legal remedial measures contaminated; to secure governmental approvals; ‰ expenses liabilities, including financial responsibility for are properties our if 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 compliance with applicable laws and regulations. often which exceed policies, 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 requirements legal that Further, an increasing number of requirements. investors are also expecting companies to disclose environmental, (“ESG”) and policies, practices and metrics, on topics such as climate change, carbon emissions, water usage, waste management, and human capital. Compliance with these policies increases our operating expenses, and non-compliance can adversely affect customer and investor relationships and harm our business and the price of our common stock. governance applicable social 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 affect our operating results. We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations, as well as meeting related customer and investor expectations, may adversely affect our business and results of operations. 18 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 fluctuations; controls and currency exchange rate ‰ inflation, as well as changes in existing and expected rates of inflation, which vary across the jurisdictions in which we do business; ‰ formal or informal doing-business sanctions, tariffs and other related restrictions; imposition of export, import or trade regulations, ‰ labor market conditions and workers’ rights affecting those of our our manufacturing operations or customers or suppliers; 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 instability such as the conflict in Ukraine, political which may assembly, logistics, security and communications and result in reduced demand for our products; disrupt manufacturing, ‰ 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, and antitrust environment, health, and safety; competition, ‰ markets for 5G infrastructure not developing in the manner or in the time periods we anticipate, including as a result of unfavorable developments with evolving laws and regulations worldwide; and ‰ pandemics and similar major health concerns, including COVID-19 and related mitigation actions (such as the recent lockdowns in China), which could adversely affect our business and our customer order patterns. privacy, data and to customers Sales located outside the U.S. accounted for approximately 58% of our revenue in fiscal 2022, of which approximately 32% 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 imported Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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. 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. time as our As a global company, our results are affected by movements in currency exchange rates. Our exposure may increase or decrease over 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, Europe and Central America, 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 certain working capital items related to our foreign-based operations are, in some instances, 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 the U.S. dollar weakens and Singapore Dollar. compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. If currency including 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 controls and contain inflation, 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 and regulations, including actions in furtherance of China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, foster the emergence of Chinese-based competitors, decrease the demand for our products in China and reduce the supply of critical materials for our products, which could have a material adverse effect on our business and results of operations. 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 to take administrative, legislative or regulatory action that could materially interfere with our ability to products and export, reexport, transfer from exporting, Furthermore, we have experienced and may continue to experience restrictions on our ability to export, reexport, and transfer our products and other items to certain foreign customers and suppliers where exports, reexports, or transfers of products require export licenses or are prohibited by government action. The U.S. government has in the past imposed export restrictions that effectively banned American and companies transferring products to certain of our customers. If such restrictions are imposed again in the future and even if subsequently lifted, any financial or other penalties could have a continuing negative impact on our In future revenue and results of operations. addition, our customers or suppliers affected by future U.S. government sanctions or threats of sanctions may respond by developing their own solutions to foreign replace our products or by adopting our competitors’ solutions. reexporting, 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 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 ability to make scheduled payments on or to refinance our debt obligations 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 financial generate cash in the future and on our 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. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may face liquidity issues and be forced to reduce or delay investments to sell assets, seek and capital expenditures, or 19 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 the use of 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, our credit agreement and the indentures governing our senior the proceeds from any notes limit 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. The agreements and instruments governing our debt impose restrictions that may limit our operating and financial flexibility. The credit agreement governing our revolving facility and term loan and the indentures governing our senior notes contain a number of significant restrictions and covenants that limit our ability to: ‰ incur additional debt; ‰ pay dividends, make distributions other 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. certain including a significant financial maintenance 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, our credit agreement requires us to comply with covenants. Operating results below current levels or other adverse factors, increase in interest rates, could result in our being unable to comply with the financial covenants contained in our revolving facility. If we violate covenants under our credit agreement and are unable to obtain a waiver from our lenders, our debt under our 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 commercially reasonable terms, or terms that are 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 20 more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions. Risks Related to Intellectual Property, 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. 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, expose us to liability or disrupt our ability to operate critical business functions, which would cause our business and reputation to suffer. technical know-how and We rely on trade secrets, other unpatented proprietary information relating to our product development and manufacturing activities to provide us with competitive advantages. We protect this into confidentiality consultants, agreements with 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 our proprietary information or otherwise interrupt our business. Like others, we are also subject to significant system or network disruptions from numerous causes, including computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. breaches, computer malware, Security 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. Any loss of such information could harm our competitive position, result in a loss of customer confidence in the threat mitigation and detection adequacy of our 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 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 such system improvements will be sufficient to prevent or limit the damage from any future cyber-attack or network disruptions. implement Furthermore, we rely on products and services provided by third-party suppliers to operate certain critical business systems, including without limitation, cloud- based infrastructure, encryption and authentication technology, employee email, and other functions, which exposes us to supply-chain attacks or other business disruptions. We cannot guarantee that third parties and or infrastructure supply chain our in Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 our partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems, including our products and services, or the third-party information technology systems that support our services. Our ability to monitor these third parties’ information security practices is limited, and these may not have adequate information security measures in place. In addition, if one of our third- party suppliers suffers a security breach, our response may be limited or more difficult because we may not have direct access to their systems, logs and other information related to the security breach. If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could affect adversely our business and results of operations. Furthermore, 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 also result in loss of competitive advantages derived from our R&D efforts or our IP. Moreover, these events may result in the early obsolescence of our products, product development delays, or diversion of the attention of management and key information technology and other resources, or otherwise adversely affect our internal operations and reputation. 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, as well as our own policies and standards. The theft, loss, or misuse of personal data collected, used, stored, or transferred by us to run our business, or by our third-party service providers, including business process software applications providers and other vendors that have access to sensitive data, could result in damage to our reputation, disruption of our business activities, significantly increased business and security costs or costs related to defending legal claims. Global privacy legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment. For 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 21 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 they are viewed as discouraging common stock if 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 and including market 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; ‰ differences, whether actual or perceived, between our corporate social responsibility and ESG practices and disclosure and investor expectations; ‰ 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. can In addition, experience considerable price and volume fluctuations that are unrelated to our performance. the stock market in general ITEM 1B. UNRESOLVED STAFF COMMENTS. None. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 In addition, 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. that contains provisions In addition, the General Corporation Law of the State of Delaware regulate “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 22 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 2, 2022: 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 Module and filter assembly and test Packaging and test (1) We hold land-use rights for the land associated with this property. In fiscal 2021, we temporarily idled a BAW manufacturing facility (owned) in Farmers Branch, Texas. 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, 2022, there were 653 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. The following graph and table compare the cumulative total shareholder return of our common stock, the S&P 500 Index, the Nasdaq Electronic Components Index (former industry index) and the S&P Semiconductors Index (new industry index), for the five years ended April 2, 2022. We believe the new industry index is more representative of the industry in which we operate. The graph and table assume an initial investment of $100 was made on April 1, 2017 in each of our common stock and the indexes, reflecting compounded daily returns as well as reinvestment of all dividends. The indexes are reweighted daily using the market capitalization on the previous trading day. The comparisons in the graph and table are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our common stock. 23 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 PERFORMANCE GRAPH COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Qorvo, Inc., the S&P 500 lndex, the NASDAQ Electronic Components Index and the S&P Semiconductors Index $400 $350 $300 $250 $200 $150 $100 $50 $0 4/1/17 3/31/18 3/30/19 3/28/20 4/3/21 4/2/22 Qorvo, Inc. S&P 500 S&P Semiconductors NASDAQ Electronic Components Qorvo, Inc. S&P 500 S&P Semiconductors (new industry index) Nasdaq Electronic Components (former industry index) April 1, 2017 $100.00 $100.00 $100.00 $100.00 March 31, 2018 $102.76 $113.99 $136.49 $135.34 March 30, 2019 $104.62 $124.82 $143.09 $133.28 March 28, 2020 $117.69 $116.11 $152.66 $139.93 April 3, 2021 April 2, 2022 $281.36 $177.23 $181.54 $209.94 $269.43 $343.53 $272.10 $324.18 The graph and the table above shall not be deemed “filed” with the SEC for the purpose of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filings made by us with the SEC, regardless of any general incorporation language in such filing. 24 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Issuer Purchases of Equity Securities Period January 2, 2022 to January 29, 2022 January 30, 2022 to February 26, 2022 February 27, 2022 to April 2, 2022 Total number of shares purchased (in thousands) 284 1,039 1,138 Average price paid per share $140.92 132.89 130.80 Total number of shares purchased as part of publicly announced plans or programs (in thousands) 284 1,039 1,138 Approximate dollar value of shares that may yet be purchased under the plans or programs $1,148.5 million 1,010.5 million 861.7 million Total 2,461 $132.85 2,461 $ 861.7 million On May 5, 2021, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $2.0 billion of our outstanding common stock, which included approximately $236.9 million authorized under a prior program terminated concurrent with the new authorization. Under this program, share repurchases are made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which we repurchase our shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The program does not require us 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. See Note 16 of the Notes to Consolidated Financial Statements for further discussion of our share repurchase program. ITEM 6. [RESERVED] 25 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 global leader in the development and commercialization of technologies and products for wireless, wired and power markets. We design, develop, manufacture and market our products to U.S. and international OEMs and ODMs in two operating segments, MP and IDP, which are also our reportable segments. MP is a global supplier of cellular, UWB, Wi-Fi and other wireless solutions for a variety smartphones, wearables, laptops, tablets and IoT. IDP is a global supplier of RF, SoC and power management solutions for a wide range of markets, including cellular and IT infrastructure, automotive, renewable energy, defense and IoT. applications, including of In fiscal 2022, the semiconductor industry continued to experience supply constraints, and we have taken actions to address short and long-term supply requirements. During the second quarter ended October 2, 2021, we entered into a long-term capacity to reserve agreement with a foundry manufacturing supply capacity. Under the agreement we are required to purchase, and the foundry supplier is required to supply, a certain number of wafers for calendar years 2022 through 2025. See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding this agreement. supplier in of the the industry demand, customer (including The COVID-19 pandemic recent COVID-19 lockdowns in China) has been a contributing supply semiconductor factor constraints and may continue to cause volatility and uncertainty worldwide economies and financial markets for an extended time. To date, any negative impact of period of COVID-19 on the overall demand for our products, cash capital liquidity position has been expenditures and our limited, capacity although we constraints in our supply chain as described above. However, the recent COVID-19 lockdowns in China could negatively impact the overall demand for our products, cash flows from operations, need for capital liquidity position in future expenditures and our periods. from operations, addressing flows need are for 26 our and Fiscal 2022 Financial Highlights ‰ Revenue increased 15.7% in fiscal 2022 to $4,645.7 million, compared to $4,015.3 million in fiscal 2021, driven primarily by higher demand for our power solutions management, automotive and broadband products, partially offset by lower demand for our base station and defense and aerospace products. 5G mobile ‰ Gross margin for fiscal 2022 was 49.2%, compared to 46.9% in fiscal 2021, primarily due to lower intangible amortization expense as well as lower unit costs on higher volume and productivity. The increase in gross margin was partially offset by average selling price erosion. ‰ Operating income was $1,226.1 million in fiscal 2022, compared to $906.6 million in fiscal 2021. This increase was primarily due to higher revenue and favorable gross margin, partially offset by higher operating expenses. Operating expenses increased primarily due to higher personnel costs, a goodwill product and impairment development lower partially intangible amortization expense and lower incentive- based compensation. increased offset charge spend, ‰ Net income per diluted share was $9.26 for fiscal 2022, compared to net income per diluted share of $6.32 for fiscal 2021. ‰ Cash flows from operations was $1,049.2 million for fiscal 2022, compared to $1,301.9 million for fiscal 2021. This year-over-year decrease was primarily due to increased inventory as well as prepayments of certain fees and deposits associated with a long- term capacity reservation agreement. The increased inventory related to the lower demand for 5G handsets from China-based OEMs and the build of inventory in anticipation of certain customers’ product ramps. ‰ Capital expenditures were $213.5 million in fiscal 2022, compared to $187.0 million in fiscal 2021. Our capital expenditures in fiscal 2022 included investments in premium filter capacity. ‰ We completed the acquisitions of NextInput and United SiC for a total of $389.1 million, net of cash acquired. by ‰ We recorded a $48.0 million goodwill impairment charge associated with the NextInput acquisition. ‰ We issued $500.0 million aggregate principal amount of 1.750% senior notes due 2024 (the “2024 Notes”). ‰ We repaid $197.5 million on the 2020 Term Loan (as defined below), plus accrued and unpaid interest. ‰ We repurchased approximately 7.3 million shares of approximately stock for our common $1,152.3 million. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 RESULTS OF OPERATIONS Consolidated The table below presents a summary of our results of operations for fiscal years 2022 and 2021 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 April 3, 2021, filed with the SEC on May 24, 2021, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended March 28, 2020 along with a year-over-year comparison between fiscal years 2021 and 2020. (In thousands, except percentages) Revenue Cost of goods sold Gross profit Research and development Selling, general and administrative Other operating expense Fiscal 2022 Fiscal 2021 Increase (Decrease) Dollars % of Revenue Dollars % of Revenue Dollars Percentage Change $4,645,714 2,359,546 100.0% $4,015,307 2,131,741 50.8 100.0% $630,407 227,805 53.1 15.7% 10.7 2,286,168 623,636 349,718 86,745 49.2 13.4 7.5 1.9 1,883,566 570,395 367,238 39,306 46.9 14.2 9.1 1.0 402,602 53,241 (17,520) 47,439 21.4 9.3 (4.8) 120.7 Operating income $1,226,069 26.4% $ 906,627 22.6% $319,442 35.2% REVENUE Revenue increased primarily due to higher demand for our 5G mobile solutions and our power management, automotive and broadband products, partially offset by lower demand for our base station and defense and aerospace products. The higher demand for our mobile solutions was driven by 5G content increases with our largest customers, and the increased demand for our power management products was driven by the migration to smaller and more efficient power solutions. The increased demand for our automotive and broadband products was driven by the proliferation of connected devices and the increasing requirements for higher efficiency, greater throughput and smaller size. The lower demand for our base station products was attributed to fewer 5G massive Multiple-Input/ Multiple-Output (“mMIMO”) deployments in China, and the lower demand for our defense and aerospace products was due to the timing of programs. sales through to multiple We provided our products to our largest end customer (Apple) contract manufacturers, which in the aggregate accounted for approximately 33% and 30% of total revenue in fiscal respectively. Samsung years 2022 and 2021, accounted for approximately 11% and 7% of total revenue in fiscal years 2022 and 2021, respectively. These customers primarily purchase RF solutions for a variety of mobile devices. International shipments amounted to $2,717.3 million in fiscal 2022 (approximately 58% of revenue) compared to $2,384.2 million in fiscal 2021 (approximately 59% of revenue). Shipments to Asia totaled $2,465.7 million in fiscal 2022 (approximately revenue) compared to $2,191.2 million in 53% of fiscal 2021 (approximately 55% of revenue). GROSS MARGIN Gross margin increased primarily due to lower intangible amortization expense as well as lower unit costs on higher volume and productivity. The increase in gross margin was partially offset by average selling price erosion. OPERATING EXPENSES Research and Development R&D spending increased primarily due to additional headcount and higher design and development costs associated with our UWB solutions, biotechnology testing solutions and 5G mobile solutions as well as the acquisition of United SiC. These increases were partially offset by lower incentive-based compensation. Selling, General and Administrative Selling, general and administrative expense decreased primarily due to lower intangible amortization expense and lower These decreases were partially offset by higher personnel and commission expenses. incentive-based compensation. Other Operating Expense Other operating expense increased in fiscal 2022 primarily due to a goodwill impairment charge of $48.0 million. See Note 6 of the Notes to Consolidated Financial Statements for additional information. 27 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Operating Segments Mobile Products (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Fiscal Year Increase 2022 2021 Dollars Percentage Change $3,545,253 $2,856,813 1,008,171 1,290,132 $688,440 281,961 24.1% 28.0 36.4% 35.3% MP revenue increased primarily due to higher demand for our mobile solutions driven by 5G content increases with our largest customers. MP operating income increased primarily due to the effects of increased revenue and lower unit costs on higher volume and productivity. These increases were partially offset by average selling price erosion and higher operating expenses. Operating expenses increased primarily due to additional headcount and higher design and development costs associated with our UWB solutions and 5G mobile solutions as well as the acquisition of NextInput. These increases were partially offset by lower incentive-based compensation. Infrastructure and Defense Products (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Fiscal Year Decrease 2022 2021 Dollars $1,100,461 $1,158,494 $(58,033) (21,996) 261,511 283,507 23.8% 24.5% Percentage Change (5.0)% (7.8) IDP revenue decreased primarily due to lower demand for our base station and defense and aerospace products, partially offset by increased demand for our power management, automotive and broadband products. The lower demand for our base station products was attributed to fewer 5G mMIMO deployments in China, and the lower demand for our defense and aerospace products was due to the timing of programs. The increased demand for our power management products was driven by the migration to smaller and more efficient power solutions. The increased demand for our automotive and broadband products was driven by the proliferation of connected devices and the increasing requirements for higher efficiency, greater throughput and smaller size. IDP operating income decreased primarily due to decreased revenue and higher operating expenses, partially offset by favorable changes in gross margin. Operating expenses increased primarily due to increased expenses associated with the design and development of our biotechnology testing solutions as well as the acquisition of United SiC, partially offset by lower incentive-based compensation. Gross margin was favorable primarily due to improved product mix, average selling price expansion and lower costs from improved factory utilization. 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 2022, 2021 and 2020. 28 INTEREST, OTHER INCOME (EXPENSE) AND INCOME TAXES domestic tax credits. For fiscal 2021, this resulted in an annual effective tax rate of 9.1%. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Fiscal Year 2022 2021 (In thousands) Interest expense Other income (expense), net Income tax expense $ (63,326) $(75,198) (24,049) (73,769) 18,341 (147,731) Interest expense During fiscal 2022, we recorded interest expense primarily related to our 4.375% senior notes due 2029 (the “2029 Notes”) and our 3.375% senior notes due 2031 (the “2031 Notes”). During fiscal 2021, we recorded interest expense primarily related to our 5.50% senior notes due July 15, 2026 (the “2026 Notes”), the 2029 Notes and the 2031 Notes. Interest expense in the preceding table for fiscal years 2022 and 2021 is net of capitalized interest of $3.7 million and $4.1 million, respectively. Other income (expense), net Other income (expense) includes realized or unrealized gains and losses from investments, interest income, foreign currency changes and losses on debt extinguishments. During fiscal 2022, we recorded $12.0 million of income based on our share of the earnings from our limited partnership investments, and we recorded net gains of $2.7 million from other investments. During fiscal 2021, we recorded $21.5 million of income based on our share of the earnings from our limited partnership investments, and we recorded net gains of $9.1 million from other In addition, we recognized a loss on debt extinguishment of $62.0 million primarily related to the redemption of our 2026 Notes on October 16, 2020. investments. 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 2022 and 2021, the valuation allowance against domestic and foreign deferred tax assets was $36.3 million and $36.5 million, respectively. See Note 13 of the Notes to Consolidated Financial Statements regarding income taxes. information additional for STOCK-BASED COMPENSATION Under 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 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 2, 2022, related to unvested restricted compensation cost stock units was $121.0 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. LIQUIDITY AND CAPITAL RESOURCES for tax fiscal 2022 expense Income tax expense Income was $147.7 million. This was primarily comprised of tax expense related to domestic and international operations generating pre-tax book income (exclusive of nondeductible expenses associated with acquisition related adjustments), the impact of the Tax Act’s GILTI provisions and an increase in gross unrecognized tax benefits, offset by a tax benefit related to international operations losses and generating pre-tax book domestic tax credits. For fiscal 2022, this resulted in an annual effective tax rate of 12.5%. Income tax expense for fiscal 2021 was $73.8 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 with regards to certain unrepatriated foreign earnings and an increase in gross unrecognized tax benefits, related to international offset by a tax benefit losses and operations generating pre-tax book Cash generated by operations is our primary source of liquidity. As of April 2, 2022, we had working capital of including approximately $972.6 million in cash and cash equivalents, compared approximately $1,802.2 million, including $1,397.9 million in cash and cash equivalents, as of April 3, 2021. to working $1,774.7 million, capital of Our $972.6 million of total cash and cash equivalents as of April 2, 2022, includes $831.8 million held by our foreign subsidiaries, of which $709.5 million is held by Qorvo International Pte. Ltd. in Singapore. If the undistributed earnings of our foreign subsidiaries are needed in the U.S., we may be required to pay state income and/or foreign local withholding taxes to repatriate these earnings. 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 restated, modified or agreement (as amended, 29 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 as credit dated previous agreement otherwise supplemented from time to time, 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 the of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement included a senior term loan (the “2020 Term Loan”) of $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit a 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. Revolving includes Facility The Pursuant to the 2020 Credit Agreement, we may request one or more additional tranches of term loans increases to the Revolving Facility, up to an or aggregate of $500.0 million and subject to, among other things, securing additional funding commitments from the existing or new lenders. During fiscal 2022, there were no borrowings under the Revolving 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, and during fiscal 2022, we repaid the remaining principal balance of $197.5 million on the 2020 Term Loan. contains The 2020 Credit various Agreement conditions, covenants and representations with which we must be in compliance in order to borrow funds and to avoid an event of default. As of April 2, 2022, we were in compliance with these covenants. See Note 9 of the Notes to Consolidated Financial Statements for further information about the Credit Agreement, including applicable interest rates. 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 $117.0 million authorized under a prior program which was terminated concurrent with this authorization. included stock, which On May 5, 2021, we announced that our Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of our outstanding approximately common stock, $236.9 million program the announced on October 31, 2019, which was terminated concurrent with the new authorization. As which authorized included under 30 of April 2, 2022, availability under the share repurchase program. there was $861.7 million of Under our share repurchase programs, repurchases are made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which we repurchase our shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory investment opportunities and other considerations. The current program does not require us 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. requirements, alternative We repurchased 7.3 million shares, 3.6 million shares and 6.4 million shares of our common stock during fiscal years 2022, 2021 and 2020, respectively, at an aggregate cost of $1,152.3 million, $515.1 million and $515.1 million, respectively. Cash Flows from Operating Activities Operating activities in fiscal 2022 generated cash of $1,049.2 million, compared to $1,301.9 million in fiscal 2021. This decrease in cash provided by operating activities was primarily due to increased inventory as well as prepayments of certain fees and deposits long-term capacity inventory reservation related to the lower demand for 5G handsets from inventory in China-based OEMs and the build of anticipation of certain customers’ product ramps. These decreases to cash provided by operating activities were partially offset by increased profitability as a result of demand and revenue growth. associated with agreement. increased The a Cash Flows from Investing Activities Net cash used in investing activities in fiscal 2022 was $596.0 million, compared to $218.7 million in fiscal 2021. This increase in cash used in investing activities was primarily due to the acquisitions of NextInput and United SiC in fiscal 2022, which resulted in net cash outflows of $389.1 million, as compared to the acquisition of 7Hugs Labs S.A.S. in fiscal 2021, which resulted in net cash outflows of $47.7 million. See Note 5 of the Notes to Consolidated Financial Statements for additional information regarding our business acquisitions. Cash Flows from Financing Activities Net cash used in financing activities in fiscal 2022 was $875.5 million, compared to $401.9 million in fiscal 2021. This increase in cash used in financing activities was primarily due to stock repurchases. See the Notes to Consolidated Financial Note 16 of information regarding our Statements for additional stock repurchases. 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, relationships with technological advances and our suppliers and customers. Based on current and projected levels of cash flows from operations, coupled with our existing cash and cash equivalents and our 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 CONTRACTUAL OBLIGATIONS Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 cash flows may be insufficient to meet our needs. If existing 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 debt or equity financing could be dilutive to holders of our common stock. Further, we cannot be sure that additional debt or equity financing, if required, will be available on favorable terms, if at all. The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 2, 2022, 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) Payments Due By Fiscal Period Total Payments 2023 2024-2025 2026-2027 $ 137,176 $ 116,482 $ 20,694 $ — $ 2,019,516 104,886 2,586,399 902,162 20,839 69,587 880,450 30,581 627,313 236,904 22,062 133,437 2028 and thereafter — — 31,404 1,756,062 Total $4,847,977 $1,109,070 $1,559,038 $392,403 $1,787,466 (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 2, 2022. (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 2, 2022. See Note 11 of the Notes to Consolidated Financial Statements for further information. (3) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2024 Notes, the 2029 Notes and the 2031 Notes, including anticipated interest payments not recorded as liabilities on our Consolidated Balance Sheet as of April 2, 2022. 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 2, 2022, in addition to the amounts shown in the contractual obligations table above, we have $13.8 million of unrecognized income tax benefits and accrued interest and penalties which 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 that we elected to pay over eight years which has been recorded as a liability. The remaining obligation of $5.4 million is to be paid over the next four years. 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 $12.1 million as of April 2, 2022. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the amount and timing of any future cash outflows. approximately Pension $0.3 million in fiscal 2022 and are expected to be approximately $0.3 million in fiscal 2023. payments were benefit We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a an for the plan under obligation specified percentage of their cash compensation. We the record 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 2, 2022 was $39.4 million, of which $1.5 million is estimated to be paid in fiscal 2023. See Note 10 of the Notes to further Consolidated information. Statements Financial for SUPPLEMENTAL PARENT AND GUARANTOR FINANCIAL INFORMATION In accordance with the indentures governing the 2024 Notes, the 2029 Notes and the 2031 Notes (together, the “Notes”), our obligations under the 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. 31 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 subsidiaries and our non-U.S. subsidiaries do not guarantee the 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. Summarized Balance Sheets (in thousands) ASSETS Current assets (1) Non-current assets LIABILITIES Current liabilities Long-term liabilities (2) April 2, 2022 April 3, 2021 $ 771,528 $1,143,086 $2,624,454 $2,450,960 $ 241,674 $ 240,943 $2,634,501 $2,250,666 (1) Includes net amounts due from Non-Guarantor subsidiaries of $286.8 million and $532.4 million as of April 2, 2022 and April 3, 2021, respectively. (2) Includes net amounts due to Non-Guarantor subsidiaries of $433.5 million and $395.3 million as of April 2, 2022 and April 3, 2021, respectively. Summarized Statement of Income (in thousands) Revenue Gross profit Net loss Fiscal Year 2022 $1,126,193 $ 268,025 $ (93,405) 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 materially 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 to the presentation of our financial condition and results of operations and require judgment and estimates on the part of significant 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 policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. See Note 1 of the Notes to Consolidated Financial Statements. 32 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 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 2022 and 2021. 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 the fair value of those assets. The process of evaluating property and equipment for impairment is 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 is the identifiable liabilities assets and recorded to goodwill. Goodwill is assigned to the 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 assets requires the 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 value assets acquired and liabilities accurately 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. Impairment Testing. Goodwill In accordance with ASC 350, “Intangibles—Goodwill and Other” (“ASC 350”), is not amortized, but rather is reviewed for goodwill impairment at the reporting unit level on the first day of our fourth quarter of each fiscal year, or when there is evidence that events or changes in circumstances indicate that the carrying amount of the goodwill may not be recovered. Under ASC 350, we have the option to first assess qualitatively whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We establish our reporting units based on our current organizational structure, product and technology characteristics and segment management’s view of the business. As of January 2, 2022, we identified three reporting units within the MP operating segment and two reporting units within the IDP operating segment, and we performed the optional qualitative assessment to determine whether the existence of events or circumstances indicated that it was more likely than not that the fair value of each reporting unit was less than its respective carrying value. In performing qualitative assessments, we consider (i) our overall historical and projected future operating Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 other relevant events and factors affecting the reporting unit. that their related carrying exceeded four of our five reporting units’ In fiscal 2022, we completed our annual qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely than not fair values values. However, for one of our MP reporting units (the acquired NextInput business), it was determined that the market adoption of the acquired technology into mobile handsets is expected to be delayed compared to Therefore, we determined that it was more likely than not that the fair value of the reporting unit was less than its carrying amount, and we performed a quantitative assessment to calculate the fair value of the reporting unit. assumptions. previous the Our quantitative assessment considered both the income and market approaches to estimate the fair value of the reporting unit. The income approach is based on the discounted cash flow method that uses the reporting unit’s forecasted future estimates of financial performance including revenues, operating taxes and capital expenditures. These expenses, estimates are developed as part of our long-term planning process based on assumed market segment growth rates and our assumed market segment share, estimated costs based on historical data and various internal estimates. Projected cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the cash flows. The market approach is based on financial multiples (i.e., multiples of revenue or earnings before income taxes, depreciation and amortization) of comparable companies. Based on the quantitative assessment performed, we determined that the carrying amount of the reporting unit exceeded its fair value, which resulted in a goodwill approximately impairment charge is $48.0 million. The goodwill recorded in “Other operating expense” in the Statement of Income for the fiscal year ended April 2, 2022. impairment charge of Inherent in the fair value determination are significant judgments and estimates, including assumptions about our future revenue, profitability and cash flows, our operational plans and our interpretation of current economic indicators and market valuations. To the extent these assumptions are incorrect or there are further declines in our business outlook, additional goodwill impairment charges may be recorded in future periods. 33 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 In fiscal 2021, we completed qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely than not that each of the reporting unit’s fair value exceeded its related carrying value, and no further impairment testing was required. Identified Intangible Assets. We amortize definite-lived intangible assets (including developed technology, customer relationships, technology licenses, backlog lives. and trade names) over their estimated useful 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 indicate that We evaluate definite-lived intangible assets for impairment in accordance with ASC 360-10-35, “Impairment or Disposal of Long-Lived 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) 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 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 In connection with completing our fiscal 2022 annual goodwill impairment assessment, we also evaluated our long-lived intangible assets and determined that the forecasted undiscounted net cash flows related to these assets were in excess of their carrying values. No definite-lived intangible asset impairment charges were recorded for fiscal years 2022 or 2021. 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 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). consignment Revenue programs at a point in time when the products are recognized from our is 34 from Contracts with Customers,” pulled from consignment inventory by the customer. Revenue recognized for products and services over- time is immaterial (less than 3% of overall revenue). We apply a five-step approach as defined in ASC 606, “Revenue in 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. identifying (1) Sales agreements are in place with certain customers to and contain terms and conditions with respect 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. to or 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 the refund net adjustment consideration to which we expect 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. We determine variable consideration by estimating the to most 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 may certain 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 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 2, 2022 and April 3, 2021. We invoice customers upon shipment and recognize revenues in accordance with delivery terms. As of April 2, 2022, we had $424.7 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 Income) are expensed Consolidated Statements of when incurred because such commissions are not owed until the performance obligation is satisfied, which coincides with the end of the contract term; 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 liabilities and the recoverability of resultant deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense. tax 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 ultimately be recoverable. In this process, certain 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 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 Statements regarding for changes in the valuation allowance and net deferred tax assets. information additional result 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 tax Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 tax 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 a in income tax expense which will 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 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management The primary objective of our financial risk management activities is to reduce the negative financial impact foreign rates, resulting from changes in interest currency exchange rates, equity prices and commodity prices (the “Underlying Exposures”). We manage these Underlying Exposures through operational means as financial well as 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 risk management activities will be our successful in mitigating the financial impact resulting from movements in the Underlying Exposures. through the use of financial various Interest Rate Risk We may be exposed to interest rate risk via the terms of our Credit Facility. If the Credit Facility were to be drawn (through a term loan or our Revolving Facility), it would bear interest at a variable rate. See Note 9 of the Notes to Consolidated Financial Statements for further information. As of April 2, 2022, we did not have any outstanding borrowings under the Credit Facility. Foreign Currency Exchange Rate Risk 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 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 35 2022. If the U.S. dollar increased in value 10% in currency re-measured relation instruments, our net income would have increased by approximately $3.6 million in fiscal 2022. 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 2, 2022, our marketable equity investments were immaterial. See Note 7 of the Notes to Consolidated Financial Statements for further information. commodities. We 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 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. have also an Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 some based are, operations in instances, 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. If For fiscal 2022, we incurred a foreign currency loss of $1.5 million as compared to a loss of $3.8 million in fiscal 2021, which is recorded in “Other income (expense), net.” financial instrument holdings, Our including foreign receivables, cash and payables at April 2, 2022, 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 decreased by approximately $4.4 million in fiscal 36 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 PCAOB ID:42 Page 38 39 40 41 42 43 72 37 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ASSETS Current assets: April 2, 2022 April 3, 2021 Cash and cash equivalents Accounts receivable, net of allowance of $402 and $331 as of April 2, 2022 and $ 972,592 $1,397,880 April 3, 2021, 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 Other current liabilities Total current liabilities Long-term debt Other long-term liabilities Total liabilities Commitments and contingent liabilities (Note 11) Stockholders’ equity: 568,850 755,748 49,839 32,151 70,685 2,449,865 1,253,591 2,775,634 674,786 31,086 324,110 457,431 507,787 41,572 27,324 51,810 2,483,804 1,266,031 2,642,708 611,155 35,370 182,402 $7,509,072 $7,221,470 $ 327,915 $ 313,868 255,060 112,653 240,186 107,026 675,127 2,047,098 233,629 681,581 1,742,550 167,914 2,955,854 2,592,045 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; 106,303 and 112,557 shares issued and outstanding at April 2, 2022 and April 3, 2021, respectively Accumulated other comprehensive income Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity 4,035,849 5,232 512,137 4,244,740 29,649 355,036 4,553,218 4,629,425 $7,509,072 $7,221,470 See accompanying notes. 38 CONSOLIDATED STATEMENTS OF INCOME Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 (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 income (expense), net Income before income taxes Income tax expense Net income Net income per share: Basic Diluted Weighted average shares of common stock outstanding: Basic Diluted 2022 Fiscal Year 2021 2020 $4,645,714 $4,015,307 $3,239,141 2,359,546 2,131,741 1,917,378 2,286,168 1,883,566 1,321,763 623,636 349,718 86,745 570,395 367,238 39,306 484,414 343,569 70,564 1,060,099 976,939 898,547 1,226,069 906,627 423,216 (63,326) 18,341 (75,198) (24,049) (60,392) 32,265 1,181,084 807,380 395,089 (147,731) (73,769) (60,764) $1,033,353 $ 733,611 $ 334,325 $ $ 9.38 $ 6.43 $ 9.26 $ 6.32 $ 2.86 2.80 110,196 114,034 117,007 111,546 116,016 119,293 See accompanying notes. 39 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net income Other comprehensive (loss) income, net of tax: 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 (gain) loss realized upon liquidation of subsidiary Amortization of pension actuarial loss Other comprehensive (loss) income Total comprehensive income Fiscal Year 2022 2021 2020 $1,033,353 $733,611 $334,325 857 (597) 501 (25,033) 27,859 7,923 (359) 118 16 83 353 135 (24,417) 27,361 8,912 $1,008,936 $760,972 $343,237 See accompanying notes. 40 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Shares Amount Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total (In thousands) Balance, March 30, 2019 119,063 $4,687,455 $ (6,624) $ (321,152) $ 4,359,679 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 — — — — — 8,912 1,551 (974) 452 28,657 — — (6,441) (501,868) — — 77,107 — — — — — — — 334,325 334,325 — — — 69 8,912 (974) 28,657 69 (13,263) (515,131) — 21 77,107 21 Balance, March 28, 2020 114,625 $4,290,377 $ 2,288 $ — $ 4,292,665 — 733,611 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 — — — — 1,157 (29,163) 417 31,366 — — (3,642) (136,568) — — 88,728 — 27,361 — — — — — — 733,611 27,361 (29,163) 31,366 — — — (38) (38) (378,516) (515,084) — (21) 88,728 (21) Balance, April 3, 2021 112,557 $4,244,740 $ 29,649 $ 355,036 $ 4,629,425 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 Repurchase of common stock, including transaction costs Stock-based compensation — — — — 779 (49,798) 273 33,288 (7,306) (276,035) — 83,654 — 1,033,353 1,033,353 (24,417) — — — — — — — (24,417) (49,798) 33,288 (876,252) (1,152,287) — 83,654 Balance, April 2, 2022 106,303 $4,035,849 $ 5,232 $ 512,137 $ 4,553,218 See accompanying notes. 41 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 activities: Depreciation Intangible assets amortization Loss on debt extinguishment Deferred income taxes Gain on Cavendish investment Impairment of equity investment Goodwill 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: Purchases of property and equipment Purchases of businesses, net of cash acquired Other investing activities Net cash used in investing activities 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 (decrease) increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at the beginning of the period Cash, cash equivalents and restricted cash at the end of the period Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents Restricted cash included in “Other current assets” and “Other non-current assets” Total cash, cash equivalents and restricted cash 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 $ $ $ $ $ $ See accompanying notes. 42 Fiscal Year 2022 2021 2020 $ 1,033,353 $ 733,611 $ 334,325 210,949 150,466 744 31,875 — — 48,000 83,507 14,150 203,206 252,898 61,991 (18,136) — 2,775 — 89,322 (2,151) (107,896) (236,196) (176,742) 33,950 (11,815) (3,139) (21,963) 1,049,243 (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 — 75,978 23,531 21,029 10,252 (14,513) 15,425 48,670 12,935 (15,149) 945,646 (213,466) (389,136) 6,646 (595,956) (186,960) (47,069) 15,371 (218,658) (164,104) (946,043) 4,405 (1,105,742) (197,500) 499,070 (1,152,287) 38,303 (1,087,994) 1,206,750 (515,084) 42,598 — 659,000 (515,131) 50,198 (53,382) (9,714) (38,658) (9,535) (21,791) (6,717) (875,510) (401,923) 165,559 (3,281) 1,425 (1,233) (425,504) 682,697 4,230 1,398,309 715,612 711,382 972,805 $ 1,398,309 $ 715,612 972,592 $ 1,397,880 $ 714,939 213 429 673 972,805 $ 1,398,309 $ 715,612 59,393 $ 125,322 $ 36,069 $ 81,232 $ 53,236 $ 56,469 $ 48,871 55,513 22,904 Qorvo, Inc. and Subsidiaries Notes to Consolidated Financial Statements April 2, 2022 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 global leader in the development and commercialization of technologies and products for wireless, wired and power markets. The Company’s design expertise and manufacturing capabilities span multiple process technologies. The Company’s primary wafer fabrication facilities are in North Carolina, Oregon and Texas. The Company’s 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 2021 and 2020 financial statements have been reclassified to conform to the fiscal 2022 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 2, 2022, April 3, 2021 and March 28, 2020. Fiscal years 2022 and 2020 were 52-week years, and fiscal 2021 was a 53-week year. of consolidated Use of Estimates The financial the preparation statements in conformity with U.S. generally accepted accounting principles 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 tax related contingencies, valuation of long-lived and intangible assets, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience, expected future conditions and third-party evaluations. The inputs into certain of these estimates and assumptions include the the consideration of the economic impact of inventories, Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 results could differ COVID-19 pandemic. Actual materially from these estimates, and such differences could affect the operations reported in future periods. As the impact of the COVID-19 pandemic continues to develop, many of these estimates could require increased judgment and carry a higher degree of variability and volatility, and may change materially in future periods. 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 income (expense), 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 income (expense), 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 43 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes its financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique. The three-level 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 require other valuation methodologies that do not significant judgment since the inputs are corroborated by readily observable data. ‰ Level 3—includes instruments for which the valuations are based on inputs that are unobservable and fair value measurement. significant These inputs are supported by little or no market activity and reflect the use of significant management judgment. to the overall 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. 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. Inventories Inventories are stated at the lower of cost or net realizable value (cost is based on standard 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 inventory risk. Reserves are 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 full inventory cost, net of the reserve. 44 against defects in materials Product Warranty The Company generally sells products with a limited warranty and workmanship and non-conformance to applicable specifications. The majority of the Company’s product warranty claims are settled through the return of the defective product and the shipment of replacement product. Accruals are estimated based upon both our historical experience as well as specifically identified claims. If there is a material increase in the rate of customer claims compared with the Company’s historical experience or if the Company’s estimates of probable losses relating to specifically identified warranty exposures require revision, the Company may record a charge against future cost of sales. Product warranty expenses were immaterial for the periods presented. accruals related and Property and Equipment less Property and equipment are stated at cost, accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, ranging from one to 39 years. The Company 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 If the Company determines that the usage trends. 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 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 include an adverse change in the use of the Company’s assets or an expectation that the assets will be sold or otherwise disposed. The Company Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 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 period of In 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 the lease derived from information available at 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 that the extent 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 the Company made an component. accounting policy election to exclude leases with an initial term of 12 months or less from the balance sheet. In addition, 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 assets requires the Company to use valuation 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. Goodwill Impairment Testing In accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles—Goodwill and Other” (“ASC 350”), goodwill is reviewed for impairment at the reporting unit level on the first day of the Company’s fourth quarter of each fiscal year, or when there is evidence that events or changes in circumstances indicate that the carrying amount of the goodwill may not be recovered. is not amortized, but rather Under ASC 350, the Company has the option to first assess qualitatively whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. and characteristics The Company establishes its reporting units based on its current organizational structure, product and technology segment management’s view of the business. As of January 2, 2022, the Company identified three reporting units within the Mobile Products (“MP”) operating segment and two reporting units within the Infrastructure and Defense Products (“IDP”) operating segment, and the optional qualitative assessment under ASC 350 was the 45 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements the existence of performed to determine whether events or circumstances indicated that it was more likely than not that the fair value of each reporting unit was less than its respective carrying value. In performing qualitative assessments, the Company considers (i) its overall historical and projected future operating results, (ii) if there was a significant decline in its stock price for a sustained period, (iii) if there was a significant change in its market capitalization relative to its 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 other relevant events and factors affecting the reporting unit. their related carrying exceeded In fiscal 2022, the Company completed its annual qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely than not that four of its five reporting units’ fair values. values However, for one of the Company’s MP reporting units (the acquired NextInput, Inc. (“NextInput”) business), it was determined that the market adoption of the acquired technology into mobile handsets is expected to be delayed compared to the previous assumptions. Therefore, it was determined that it was more likely than not that the fair value of the reporting unit was less than its carrying amount, and a quantitative assessment was performed to calculate the fair value of the reporting unit. The quantitative assessment considered both the income and market approaches to estimate the fair value of the reporting unit. The income approach is based on the discounted cash flow method that uses estimates of the reporting unit’s forecasted future financial performance including revenues, operating taxes and capital expenditures. These expenses, estimates are developed as part of the Company’s long-term planning process based on assumed market segment growth rates and its assumed market segment share, estimated costs based on historical data and various internal estimates. Projected cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the cash flows. The market approach is based on financial multiples (i.e., multiples of revenue or earnings before income taxes, depreciation and amortization) of comparable companies. Based on the quantitative assessment performed, it was determined that the reporting unit exceeded its fair value, which resulted in impairment charge of $48.0 million. The a goodwill impairment charge is recorded in “Other goodwill the carrying amount of 46 operating expense” in the Statement of Income for the fiscal year ended April 2, 2022. in such fair value determinations of Inherent the Company’s reporting units are significant judgments including assumptions about future and estimates, revenue, profitability and cash flows, operational plans and the Company’s interpretation of current economic indicators and market valuations. To the extent these assumptions are incorrect or there are further declines in the Company’s business outlook, additional goodwill impairment charges may be recorded in future periods. In fiscal 2021, the Company completed qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely than not that each of the reporting unit’s fair value exceeded its related carrying value, and no further impairment testing was required. definite-lived Identified Intangible Assets The Company intangible amortizes assets (including developed technology, customer relationships, technology licenses, backlog and trade names) over their estimated useful lives. 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 evaluates definite-lived intangible assets for impairment in accordance with ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets” to determine whether facts and circumstances (including external factors such as 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 assets may not be recoverable. If such facts and circumstances exist, the identified Company assesses the recoverability of intangible projected the by undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against respective carrying amounts. Impairments, if any, are based on the excess of the carrying amounts over the fair value of those assets in the period in which the impairment and occur determination was made. comparing assets their In connection with completing the Company’s fiscal 2022 annual goodwill impairment assessment, the Company also evaluated its long-lived intangible Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 and that determined forecasted assets undiscounted net cash flows related to these assets were in excess of their carrying values. No definite- lived intangible asset charges were recorded for fiscal years 2022 or 2021. impairment the Accrued Liabilities The “Accrued liabilities” balance as of April 2, 2022 and April 3, 2021, includes accrued compensation and benefits of $113.6 million and $135.4 million, respectively, and interest payable of $19.8 million and $17.5 million, respectively. Other Current Liabilities The “Other current liabilities” balance as of April 2, includes income taxes 2022 and April 3, 2021, payable and $86.7 million, respectively. of $87.8 million 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 transferred to the Company’s customers, in an 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 3% of overall revenue). The Company applies a five-step approach as defined in ASC 606, “Revenue from Contracts with Customers,” in determining the amount and timing of revenue to be recognized: (1) identifying identifying the the contract with a customer; performance contract; in (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 not require minimum purchase commitments. In the 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. 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 2, 2022 and April 3, 2021. The Company invoices customers upon shipment and recognizes revenue in accordance with delivery terms. As of April 2, 2022, the Company had $424.7 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. 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. 47 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements 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 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 the years in which the tax rates in effect 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 It intent and policy to 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 to estimate the reinvested, additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated. is not practical it ASC 718, “Compensation Stock-Based 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. – As of April 2, 2022, compensation cost remaining unearned related to unvested restricted total 48 stock units was $121.0 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. 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 foreign for 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 (expense), net” in the Consolidated Statements of Income. adjustments Translation year. are 2019, Financial Accounting Pronouncements Recently Adopted In December Accounting the Standards Board issued Accounting Standards Update Income 2019-12, “Simplifying the Accounting for Taxes,” which eliminated certain exceptions within ASC 740, “Income Taxes” and clarified and simplified other aspects of the current accounting guidance. The Company adopted this standard in the first quarter of fiscal 2022, and it did not have a material impact on the Company’s consolidated financial statements. 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 believes that credit risks are moderated by the financial stability of its major customers, conservative payment terms and the Company’s strict credit policies. The Company provides products to its largest end through sales to multiple customer, Apple Inc., Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Samsung contract manufacturers, which in the aggregate accounted for approximately 33%, 30% and 33% of total revenue in fiscal years 2022, 2021 and 2020, respectively. Ltd., accounted for approximately 11%, 7% and 8% of total revenue in fiscal years 2022, 2021 and 2020, respectively. These customers primarily purchase radio frequency (“RF”) solutions for a variety of mobile devices. Electronics Co., The Company’s three largest accounts receivable balances comprised approximately 57% and 58% of aggregate gross accounts receivable as of April 2, 2022 and April 3, 2021, respectively. 3. INVENTORIES The components of inventories, net of reserves, are as follows (in thousands): Raw materials Work in process Finished goods Total inventories April 2, 2022 April 3, 2021 $134,959 $236,095 283,067 357,332 162,321 89,761 $507,787 $755,748 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 2, 2022 April 3, 2021 25,842 $ 25,842 $ 432,305 411,180 2,401,735 128,317 2,282,059 108,563 equipment, gross 2,988,199 2,827,644 Less accumulated depreciation Total property and equipment, net (1,734,608) (1,561,613) $ 1,253,591 $ 1,266,031 5. BUSINESS ACQUISITIONS During fiscal 2022, the Company completed the acquisitions of United Silicon Carbide, Inc. (“United SiC”) and NextInput. During fiscal 2021, the Company completed the acquisition of 7Hugs Labs S.A.S. (“7Hugs”). During the Company completed the acquisitions of Decawave Limited Inc. (“Decawave”), Custom MMIC Design Services, Limited (“Custom MMIC”), Cavendish Inc. (“Cavendish”) and Active-Semi Kinetics International, 2020, fiscal resulting from these (“Active-Semi”). The goodwill acquisitions is attributed to synergies and other benefits that are expected to be generated from these transactions. 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. of silicon United Silicon Carbide, Inc. On October 19, 2021, the Company acquired all the outstanding equity interests of United SiC, a leading manufacturer power for a total purchase price of semiconductors, $236.6 million. the Company’s offerings to include SiC power products for a range of applications such as electric vehicles, battery charging, renewables and IT infrastructure, circuit protection. acquisition expands carbide (“SiC”) The of purchase comprised price was The cash consideration of $227.1 million and contingent consideration of up to $31.3 million which is expected to be paid to the sellers (in the first quarter of fiscal 2024) if certain revenue and gross margin targets are achieved over the period beginning on the acquisition date through December 31, 2022. The estimated fair value of the contingent consideration was $9.5 million as of the contingent consideration liability was remeasured to a fair value of $17.6 million and is included in “Other long-term liabilities” in the Consolidated Balance Sheet. The increase in the fair value was recognized in in the Consolidated “Other operating expense” further Statement of information related to the fair value measurement. the acquisition date. At April 2, 2022, Income. See Note 7 for The purchase price was preliminarily 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 $145,780 96,755 18,127 (24,036) $236,626 (1) Includes cash acquired of $5.5 million. intangible assets acquired The more significant included developed technology of $126.1 million and customer relationships of $19.2 million. The fair value of the developed technology acquired was determined based on an income approach using 49 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements the “excess earnings method” which estimated the value 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 eleven years. The fair value of the customer relationships acquired was determined based on an income approach using the “with and without method” in which the value of the intangible asset is determined by the difference in discounted cash flows of the Company “with” the asset and the profitability of the Company These customer relationships are being amortized on a straight-line basis over their estimated useful life of three years. the profitability of the asset. “without” 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 United SiC has been assigned to the IDP segment and is not deductible for income tax purposes. During fiscal 2022, the Company recorded acquisition and integration related costs associated with the acquisition of United SiC totaling $12.2 million in in the Consolidated “Other operating expense” Statement of the Company also recorded $3.6 million of acquisition and integration related costs in “Cost of goods sold” in the Consolidated Statement of Income. Income. During fiscal 2022, the Company acquired all NextInput, Inc. On April 5, 2021, the outstanding equity interests of NextInput, a leader in microelectromechanical (“MEMS”)-based sensing solutions, for a total cash purchase price of the $173.3 million. Company’s offerings of MEMS-based products for mobile applications and provides sensing solutions for a broad range of applications in other markets. acquisition expands system The The fair value of the developed technology acquired was determined based on an income approach using the “excess earnings method” described above. The acquired being amortized on a straight-line basis over its estimated useful life of seven years. technology developed asset is The fair value of the customer relationships acquired was determined based on an income approach using the “with and without method” described above. These customer relationships are being amortized on a straight-line basis over their estimated useful life of one year. Goodwill recognized from the acquisition of NextInput has been assigned to the MP segment and is not deductible for income tax purposes. During fiscal years 2022 and 2021, the Company recorded acquisition and integration related costs associated with the acquisition of NextInput totaling $2.7 million and $1.8 million, respectively, in “Other operating expense” in the Consolidated Statements of Income. In connection with the Company’s annual qualitative goodwill impairment assessment, it was determined that the market adoption of the acquired NextInput technology into mobile handsets is expected to be delayed compared to the previous assumptions. As a quantitative result, assessment of its reporting unit, which resulted in a goodwill impairment charge of $48.0 million. See Note 6 for further information on this goodwill impairment charge. the Company completed a the Company acquired all 7Hugs Labs S.A.S. In fiscal 2021, the outstanding equity interests of 7Hugs, a private developer of ultra-wideband (“UWB”) software and solutions, cash purchase price of $48.7 million. for a total The purchase price was preliminarily 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 $ 81,000 95,211 7,261 (10,158) $173,314 (1) Includes cash acquired of $5.8 million. The more significant intangible assets acquired included developed technology of $73.0 million and customer relationships of $7.5 million. 50 During fiscal years 2022 and 2021, the Company recorded acquisition and integration related costs associated with the acquisition of 7Hugs totaling $0.2 million and $2.4 million, respectively, in “Other operating expense” in the Consolidated Statements of Income. the Company acquired all Decawave Limited In fiscal 2020, the outstanding equity interests of Decawave, a pioneer in UWB technology and provider of UWB solutions for mobile, automotive and Internet of Things (“IoT”) applications, for a total cash purchase price of $372.2 million. Notes to Consolidated Financial Statements the During fiscal years 2022, 2021 and 2020, Company recorded acquisition and integration related costs associated with the acquisition of Decawave totaling $6.7 million, $11.3 million and $12.4 million, respectively, in “Other operating expense” in the Consolidated Statements of Income. the Company acquired all Custom MMIC Design Services, Inc. In fiscal 2020, the outstanding equity interests of Custom MMIC, a supplier of high-performance gallium arsenide and gallium nitride monolithic microwave integrated circuits for defense, aerospace and commercial applications, for a total purchase price of $91.7 million. During fiscal years 2021 and 2020, the Company recorded acquisition and integration related costs associated with the acquisition of Custom MMIC totaling $10.3 million and $9.4 million, respectively, in in the Consolidated “Other operating expense” Statements of Income. fiscal 2020, Cavendish Kinetics Limited the the Company In acquisition of the remaining issued and outstanding capital of Cavendish for cash consideration of $198.4 million. The purchase of the remaining equity interest in Cavendish was considered to be an acquisition achieved in stages, whereby the previously completed Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 held equity interest was remeasured at its acquisition- date fair value. This resulted in recognition of a gain of $43.0 million in fiscal 2020, which is recorded in “Other income (expense), net” in the Consolidated Statement of Income. During fiscal years 2022, 2021 and 2020, the Company recorded acquisition and integration related costs associated with the acquisition of Cavendish totaling less than $0.1 million, $0.7 million and operating $3.8 million, expense” in the Consolidated Statements of Income. respectively, “Other in the Company acquired all Active-Semi International, Inc. the In fiscal 2020, outstanding equity interests of Active-Semi, a private fabless supplier of programmable analog power management solutions, for a total cash purchase price of $307.9 million. During fiscal years 2022, 2021 and 2020, the Company recorded acquisition and integration related costs associated with the acquisition of Active-Semi of $0.2 million, $0.8 million and $25.3 million, in “Other operating expense” in the respectively, Consolidated Statements of Income. During fiscal 2020, the Company also recorded $4.2 million of acquisition and integration related costs in “Cost of goods sold” in the Consolidated Statement of Income. 6. GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill for fiscal 2022 are as follows (in thousands): Balance as of April 3, 2021 (1) Goodwill resulting from NextInput acquisition (Note 5) Goodwill impairment Goodwill resulting from United SiC acquisition (Note 5) 7Hugs measurement period adjustments Effect of changes in foreign currency exchange rates Balance as of April 2, 2022 (1) Mobile Products $2,034,383 95,211 (48,000) — (97) (10,943) $2,070,554 Infrastructure and Defense Products $608,325 — — 96,755 — — $705,080 Total $2,642,708 95,211 (48,000) 96,755 (97) (10,943) $2,775,634 (1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs totaling $669.6 million and $621.6 million as of April 2, 2022 and April 3, 2021, respectively, which were recognized in fiscal years 2009, 2013, 2014 and 2022. In accordance with ASC 350, the Company reviewed its goodwill for impairment at the reporting unit level on the first day of its fourth quarter of fiscal 2022. The Company first performed the optional qualitative impairment assessments and concluded that based on the relevant events and circumstances it was more likely than not that four of its five reporting units’ fair values exceeded their related carrying values. However, for one of its reporting units within the MP 51 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements segment (the NextInput business), it was determined that the adoption of the acquired NextInput technology into mobile handsets is expected to be delayed compared to the previous assumptions. As a result, the Company determined that it was more likely than not that the fair value of the reporting unit was less than its carrying amount. Therefore, the Company performed a quantitative assessment to calculate the fair value of the reporting unit. The quantitative assessment considered both the income and market approaches to estimate the fair value of the reporting unit. The income approach is based on the discounted cash flow method that uses estimates of the reporting unit’s forecasted future financial performance including revenues, operating expenses, taxes and capital expenditures. These estimates are developed as part of the Company’s long-term planning process based on assumed market segment growth rates and its assumed market segment share, estimated costs based on historical data and various internal estimates. Projected cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the cash flows. The market approach is based on financial multiples (i.e., multiples of revenue or earnings before income taxes, depreciation and amortization) of comparable companies. Based on the quantitative assessment performed, the carrying amount of the reporting unit exceeded its fair value, which resulted in a goodwill impairment charge of $48.0 million. The goodwill impairment charge is recorded in “Other operating expense” in the fiscal 2022 Statement of Income. The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands): Developed technology Customer relationships Technology licenses Backlog Trade names IPRD Total (1) April 2, 2022 April 3, 2021 Gross Carrying Amount $1,026,690 104,778 2,641 — 1,933 9,734 $1,145,776 Accumulated Amortization $420,255 47,208 2,169 — 1,358 N/A $470,990 Gross Carrying Amount $1,295,113 459,052 2,368 1,600 1,090 9,695 $1,768,918 Accumulated Amortization $ 750,044 403,407 2,076 1,600 636 N/A $1,157,763 (1) Amounts include the impact of foreign currency translation. At the beginning of each fiscal year, the Company removes the gross asset and accumulated amortization amounts of intangible assets that have reached the end of their useful lives and have been fully amortized. Useful lives are estimated based on the expected economic benefit to be derived from the intangible assets. Total intangible assets amortization expense was $150.5 million, $252.9 million and $247.3 million in fiscal years 2022, 2021 and 2020, respectively. 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 2023 2024 2025 2026 2027 Estimated Amortization Expense $134,000 122,000 105,000 94,000 82,000 7. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS Equity Method Investments The Company invests in limited partnerships and accounts for these investments using the equity method. The carrying amounts of these investments as of April 2, 2022 and April 3, 2021 were $27.1 million and $29.8 million, respectively, and are classified as “Long-term investments” in the Consolidated Balance Sheets. During fiscal 52 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 years 2022 and 2021, the Company recorded income of $12.0 million and $21.5 million, respectively, based on its share of the limited partnerships’ earnings in “Other income (expense), net” in the Consolidated Statements of Income. The Company received cash distributions totaling $14.8 million and $5.9 million during fiscal years 2022 and 2021, respectively. The cash distributions were recognized as reductions to the carrying value of the investments and included in the cash flows from investing activities in the Consolidated Statements of Cash Flows. Fair Value of Financial Instruments The fair value of the financial assets and liabilities measured on a recurring basis as determined using the following levels of inputs (in thousands): April 2, 2022 Marketable equity securities Invested funds in deferred compensation plan (1) Contingent earn-out liability (2) April 3, 2021 Marketable equity securities Invested funds in deferred compensation plan (1) Contingent earn-out liability (3) Quoted Prices In Active Markets For Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) $ 2,906 39,356 — $ 3,802 32,824 — $ $ — — — — — — $ — — (17,600) $ — — (10,000) Total $ 2,906 39,356 (17,600) $ 3,802 32,824 (10,000) (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 acquisition of United SiC (see Note 5). The fair value of this liability is estimated using an option pricing model. (3) The Company recorded a contingent earn-out liability in conjunction with the acquisition of Custom MMIC. As of April 3, 2021, the fair value of the contingent consideration liability was equal to the maximum amount payable which was paid during fiscal 2022. 8. LEASES The Company leases certain of its corporate, 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. Operating leases are classified as follows (in thousands): Other non-current assets Other current liabilities Other long-term liabilities April 2, 2022 April 3, 2021 $73,683 $17,393 $61,511 $62,925 $15,068 $53,172 Details of operating leases are as follows (in thousands): Fiscal Year Operating lease expense Short-term lease expense Variable lease expense 2022 2021 2020 $19,178 $17,382 $15,184 $ 7,726 $ 7,062 $ 6,878 $ 4,886 $ 3,972 $ 3,098 Cash paid for amounts included in the measurement of operating lease liabilities $20,536 $18,697 $16,504 Right-of-use assets obtained in exchange for new operating lease liabilities $29,210 $12,899 $13,201 53 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements The weighted-average remaining lease term and weighted-average discount rates for operating leases are as follows: April 2, 2022 April 3, 2021 Weighted-average remaining lease term (years) Weighted-average discount rate 6.9 7.9 2.99% 3.82% The aggregate future lease payments for operating leases as of April 2, 2022 are as follows (in thousands): Fiscal Year 2023 2024 2025 2026 2027 Thereafter Total future lease payments Less imputed interest Present value of lease liabilities Lease Payments $19,449 16,305 11,555 10,430 9,055 21,522 88,316 (9,412) $78,904 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 2023 and therefore, is not recorded on the Consolidated Balance Sheets as of April 2, 2022 and April 3, 2021. The lease has an initial 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 $10.0 million of liabilities is expected to be recognized by the Company. term of 9. LONG-TERM DEBT Long-term debt is as follows (in thousands): Term loan 1.750% senior notes due 2024 4.375% senior notes due 2029 3.375% senior notes due 2031 Finance leases and other Unamortized premium, discount April 2, 2022 April 3, 2021 $ — $ 197,500 500,000 850,000 700,000 2,581 — 850,000 700,000 1,617 and issuance costs, net (4,692) (1,475) Less current portion of long-term debt Total long-term debt (791) (5,092) $2,047,098 $1,742,550 54 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 (as amended, restated, modified or otherwise supplemented from time to time, 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 included a senior term loan (the “2020 Term Loan”) of $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”). 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. 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, among other things, securing additional funding commitments from the existing or new lenders. (ii) (the “LIBOR Transition Amendment”) On April 6, 2022, the Company and the Administrative Agent entered into an amendment to the 2020 Credit Agreement to replace the London Interbank Offered Rate as a reference rate available for use in the computation of interest under the 2020 Credit Agreement. As a result of the LIBOR Transition Amendment, 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 Term SOFR (as defined in the 2020 Credit Agreement) or 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 Term SOFR plus 1.0% (the “Base Rate”). All swing line loans will bear to the Applicable Rate plus the Base Rate. The Term SOFR is the rate per annum equal to the forward-looking Secured Overnight Financing Rate term rate for interest periods of one, three or six months (as selected by the Company) plus an adjustment (as defined in the 2020 Credit Agreement). The Applicable Rate for Term SOFR 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 at a rate equal Notes to Consolidated Financial Statements During fiscal 2022, there were no borrowings under the Revolving 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 Loan. During fiscal 2022, the Company repaid the remaining principal balance of $197.5 million on the 2020 Term Loan. Interest paid on the 2017 Term Loan and the 2020 Term Loan during fiscal years 2022, 2021 and 2020 was $1.7 million, $2.1 million and $2.4 million, respectively. contains The 2020 Credit various Agreement 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 2, 2022, the Company was in compliance with these covenants. the Company Senior Notes due 2024 issued On December 14, 2021, $500.0 million aggregate principal amount of its 1.750% senior notes due 2024 (the “2024 Notes”). Interest is payable on the 2024 Notes on June 15 and December 15 of each year, commencing June 15, 2022. The 2024 Notes will mature on December 15, 2024, unless earlier redeemed in accordance with their terms. The 2024 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. The Company used a portion of the net proceeds of the offering of the 2024 Notes to repay all of the outstanding 2020 Term Loan, as described above, and will use the remainder of the net proceeds for general corporate purposes. The 2024 Notes were issued pursuant to an indenture, dated as of December 14, 2021 (the “2021 Indenture”), by and among the Company, the Guarantors and Computershare Trust Company, N.A., as trustee. The 2021 Indenture contains customary events of default, including payment default, exchange default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events. The 2021 Indenture also contains customary negative covenants. The 2024 Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Act”), or any state securities laws, and, unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. a into entered In connection with the offering of the 2024 Notes, the Company Rights Agreement, dated as of December 14, 2021 (the “Registration Rights Agreement”), by and among the Company and the Guarantors, on the one hand, and BofA Securities, Inc., as representative of the initial purchasers of the 2024 Notes, on the other hand. Registration (the statement registration Agreement, the Registration Rights Under the Company and the Guarantors have agreed to use their commercially reasonable efforts to (i) file with the SEC a “Exchange Offer Registration Statement”) relating to the registered exchange offer (the “Exchange Offer”) to exchange the the Company’s 2024 Notes for a new series of exchange notes having terms substantially identical in all material respects to, and in the same aggregate principal amount as, the 2024 Notes; (ii) cause the Exchange Offer Registration Statement to be declared effective by the SEC; and (iii) cause the Exchange Offer to be consummated no later than the 720th day after December 14, 2021 (or if such 720th day is not a business day, the next succeeding business day). Under certain circumstances, the Company and the Guarantors have agreed to use their commercially reasonable efforts to (i) registration statement relating to the resale of the 2024 Notes as promptly as practicable, and (ii) cause the shelf registration statement to be declared effective by the SEC as promptly as practicable. file a shelf If the Company fails to meet any of these targets, the annual interest rate on the 2024 Notes will increase by 0.25% during the 90-day period following the default and will increase by an additional 0.25% for each subsequent 90-day period during which the default continues, up to a maximum additional interest rate of 1.00% per year. If the Company cures the default, the interest rate on the 2024 Notes will revert to the original level. 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 55 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements redeemed in October 15, 2029, unless earlier accordance with their terms. The 2029 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. 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 were issued pursuant indentures, dated as of December 20, 2019 and June 11, 2020 indentures, (such collectively, The 2019 Indenture contains substantially the same customary events of default and negative covenants as the 2021 Indenture. supplemental and “2019 Indenture”). indenture the to supplemental to 100% of At any time prior to October 15, 2024, the Company may redeem all or part of the 2029 Notes, at a their principal redemption price equal 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 years 2022 and 2021 was $37.2 million and $31.6 million, respectively. 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. The 2031 Notes were issued pursuant to an 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 the same 2020 Indenture contains substantially customary events of default and negative covenants as the 2021 Indenture. At any time prior to April 1, 2026, the Company may redeem all or part of the 2031 Notes, at a redemption 56 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 103.375%, interest. accrued 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, 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 years 2022 and 2021 was $23.6 million and $11.9 million, respectively. 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 the principal amount, plus equal to 103.50% of accrued and unpaid interest. Interest paid on the 2025 Notes during both fiscal years 2021 and 2020 was $1.6 million. Senior Notes due 2026 On October 16, 2020, the Company redeemed the $900.0 million aggregate principal amount of its 5.50% senior notes due July 15, 2026 (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 combined with cash on hand plus borrowings under the 2020 Term Loan. In connection with the redemption, the Company recognized a loss on debt extinguishment of $61.0 million as “Other (expense) in the fiscal 2021 Consolidated income, net” Statement debt of 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. Income. consisted The of loss on a Interest paid on the 2026 Notes during fiscal years 2021 and 2020 was $37.3 million and $49.5 million, respectively. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 to (compared respectively Fair Value of Long-Term Debt The Company’s debt is carried at amortized cost and is measured at fair value quarterly for disclosure purposes. The estimated fair value of the 2024 Notes, the 2029 Notes and the 2031 Notes as of April 2, 2022 was $476.9 million, $852.6 million and $638.6 million, the outstanding principal amount of $500.0 million, $850.0 million and $700.0 million, respectively). 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, the outstanding principal amount of $850.0 million and $700.0 million, respectively). The Company considers its debt to be Level 2 in the fair value hierarchy. Fair values are estimated based on quoted market prices for identical or similar instruments. The 2024 Notes, the 2029 Notes and the 2031 Notes currently trade over-the-counter and the fair values were estimated based upon the value of the last trade at the end of the period. respectively (compared to fiscal 2022, the Company Interest Expense recognized During $67.0 million of interest expense primarily related to the 2029 Notes and the 2031 Notes, which was partially offset by $3.7 million of interest capitalized to the property and equipment. During fiscal 2021, Company recognized $79.3 million of interest expense primarily related to the 2026 Notes (redeemed on October 16, 2020), 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 equipment. 10. RETIREMENT BENEFIT PLANS offers differing 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 eligibility and Directors. Employees are immediately vested in their own contributions as well as employer matching contributions. In total, the Company contributed $17.6 million, $15.6 million and $14.4 million to its domestic and foreign defined contribution plans during fiscal years 2022, 2021 and 2020, respectively. valued assets 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 as of April 2, 2022 and April 3, 2021 (included in “Other non-current assets” in the Consolidated Balance Sheets). The pension benefit obligations of both plans were $12.1 million and $14.0 million as of April 2, 2022 and April 3, 2021, respectively, which is 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 including require the use of significant assumptions based on local economic conditions. The net approximately $0.6 million for each of the last three fiscal years. cost was judgement periodic benefit 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 $39.4 million and $32.8 million as of April 2, 2022 and April 3, 2021, respectively. The current portion of the deferred compensation obligation and fair value of the assets held in the rabbi trust were $1.5 million and $1.2 million as of April 2, 2022 and April 3, 2021, 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 $37.9 million and 57 The Company estimated. Legal Matters The Company is involved in various legal proceedings and claims that have arisen in the ordinary course of business that have not been fully adjudicated. The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably regularly evaluates developments in its legal matters that could affect the amount of the previously accrued liability and records adjustments as appropriate. Although it is not possible to predict with certainty the outcome of the unresolved legal matters, is the opinion of management that these matters will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position or results of operations. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal matters is not material. it 12. RESTRUCTURING recorded restructuring During fiscal years 2022, 2021 and 2020, the related charges Company totaling approximately $2.1 million, $2.7 million and $47.9 million, respectively, related primarily to fiscal 2019 actions to reduce operating expenses and improve manufacturing cost structure and other individually plans. Restructuring accrual balances were immaterial as of April 2, 2022 and April 3, 2021. restructuring immaterial 13. INCOME TAXES Income (loss) before income taxes consists of the following components (in thousands): Fiscal Year 2021 United States $ Foreign Total 2022 69,938 $125,362 $(226,005) 621,094 $1,181,084 $807,380 $ 395,089 1,111,146 682,018 2020 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements $31.6 million as of April 2, 2022 and April 3, 2021, respectively, and are included in “Other non-current assets” and “Other long-term liabilities” in the Consolidated Balance Sheets. 11. COMMITMENTS AND CONTINGENT LIABILITIES of to pay million, Purchase Obligations As of April 2, 2022, the Company’s purchase obligations (including capital commitments) totaled which $2,156.7 approximately approximately $1,018.6 million is expected to be paid during fiscal 2023. In subsequent years, the Company expects approximately $495.3 million, $405.9 million, $236.6 million and $0.3 million related to these purchase obligations during fiscal respectively. years 2024, 2025, 2026 and 2027, Noncancelable represent obligations payments due related to the purchase of materials, manufacturing services and property and equipment, a majority of which are not recorded as liabilities in the Consolidated Balance Sheet because the Company has not received the related goods or services as of April 2, 2022. purchase Amidst ongoing industry-wide supply constraints, the Company entered into a long-term capacity reservation agreement with a foundry supplier during the second quarter ended October 2, 2021. The Company agreed to pay certain fees and deposits which are recorded in “Prepaid expenses” and “Other non-current assets” in the Consolidated Balance Sheet as of April 2, 2022. the Company is required to Under is required to purchase, and the foundry supplier supply, a certain number of wafers (at predetermined sales prices) for calendar years 2022 through 2025. As of April 2, 2022, the Company estimates that it is obligated to purchase approximately $1.4 billion of wafers (included in the total purchase obligations above) under the capacity reservation agreement. the agreement Lease Commitments See Note 8 for disclosures related to lease commitments. 58 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 The components of the income tax provision are as follows (in thousands): 2022 Fiscal Year 2021 2020 Current tax expense: Federal State Foreign Deferred tax (expense) benefit: Federal State Foreign Total $ (16,886) $(11,043) $ (6,705) (93) (65,065) (71,863) (274) (98,696) (115,856) (140) (80,722) (91,905) $ (18,398) $(35,545) $ 7,826 4,603 (1,330) 11,099 $(147,731) $(73,769) $(60,764) (2,762) (10,715) (31,875) (3,771) 57,452 18,136 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 for fiscal years 2022, 2021 and 2020 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 and foreign attributes Stock-based compensation Tax reserve adjustments U.S. tax on foreign earnings, including GILTI & FDII (2) Permanent reinvestment assertion Impairments and acquisition related adjustments Other income tax (expense) benefit 2022 Fiscal Year 2021 2020 Amount Percentage Amount Percentage Amount Percentage $(248,028) 21.0% $(169,550) 21.0% $(82,969) 21.0% (1,888) 118,877 0.2 (10.1) (25,679) 148,932 2.2 (12.6) 786 231 (3,048) 11,148 (3,262) (130,874) (1,033) (12,198) (1,695) (0.1) (0.1) 0.3 (0.9) 0.3 11.1 0.1 1.0 0.1 (743) 92,532 22,286 85,851 9,026 (1,232) (1,656) 9,545 (9,979) (100,830) (8,488) (919) 388 0.1 (11.5) (2.8) (10.6) (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 $(147,731) 12.5% $ (73,769) 9.1% $(60,764) 15.4% (1) In fiscal 2022, the Company negotiated an extension to its tax holiday in Singapore, resulting in the revaluation of its deferred tax assets. As a result, the Company recognized an income tax expense of $26.4 million due to the reduced tax rate, in part from a reversal of the tax benefit recognized in fiscal 2021. In fiscal 2021, the Company completed the restructuring of the Cavendish intellectual property, resulting in the recognition of an income tax benefit of $22.1 million in Singapore. (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”). 59 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for 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. financial Significant components of the Company’s net deferred income taxes are as follows (in thousands): April 2, 2022 April 3, 2021 Deferred income tax assets: Inventory reserve Equity compensation Net operating loss carry-forwards $ 11,592 $ 9,632 13,085 27,024 14,444 24,474 Research and other credits 56,735 106,825 Employee benefits Lease liabilities Other deferred assets 21,104 17,905 10,332 19,357 15,947 8,662 Total deferred income tax assets 157,777 199,341 Valuation allowance (36,281) (36,512) Total deferred income tax assets, net of valuation allowance $ 121,496 $ 162,829 Deferred income tax liabilities: Amortization and purchase accounting basis difference $ (73,412) $ (25,553) Accumulated depreciation/basis difference (53,425) (59,756) Accrued tax on unremitted foreign earnings (22,988) (21,747) Deferred intercompany revenue (1) — (22,284) Right-of-use assets (16,591) (14,663) Other deferred liabilities (2,884) (1,681) Total deferred income tax liabilities (169,300) (145,684) Net deferred income tax (liability) asset Amounts included in the Consolidated Balance Sheets: $ (47,804) $ 17,145 Other non-current assets $ 36,824 $ 59,056 Other long-term liabilities (84,628) (41,911) Net deferred income tax (liability) asset $ (47,804) $ 17,145 (1) In fiscal 2021, the Company completed the intercompany restructuring of the Cavendish intellectual property. Due to this transaction, a portion of revenue recognized by the intercompany seller is taxable in future years. The remaining deferred intercompany revenue was taxed during fiscal 2022. 60 The Company has recorded a valuation allowance against certain U.S. and foreign deferred tax assets as of April 2, 2022 and April 3, 2021. 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 decreased by approximately $0.2 million in fiscal 2022. The decrease was comprised of a $1.6 million decrease for the valuation allowance against deferred tax assets for net operating losses and other deferred tax assets at foreign subsidiaries and a $1.4 million increase in the valuation allowance against certain domestic deferred tax assets for net operating losses and credits. At the end of fiscal 2022, a $1.3 million valuation allowance remained against deferred tax assets at foreign subsidiaries, and a $34.9 million domestic valuation deferred tax assets. allowance remained against The valuation allowance against deferred tax assets increased by $1.2 million in fiscal 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 fiscal 2021, a foreign subsidiaries. At $2.9 million valuation allowance remained against deferred tax assets at foreign subsidiaries, and a $33.6 million valuation allowance remained against state deferred tax assets. the end of 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 years 2023 to 2042, loss As of April 2, 2022, the Company had federal carryovers of approximately $53.3 million that expire in fiscal years 2023 to 2042, if unused, and state losses of approximately $122.2 million that expire in if unused. Federal fiscal research credits of $110.2 million, and state credits of $65.4 million expire in fiscal years 2031 to 2042 and 2023 to 2042, respectively. The Company had foreign losses of $100.0 million, which expire in fiscal if unused. The utilization of years 2023 to 2032, Notes to Consolidated Financial Statements acquired domestic tax assets is subject to certain annual limitations as required under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and similar state income tax provisions. 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 Costa Rica and Singapore. The Company’s tax holiday in Costa Rica is set to expire in December 2027. During fiscal 2022, the Company in negotiated an extension to its tax holiday Singapore, now expiring in December 2031. Incentives to the Company from these countries are subject investment meeting and requirements. Relative to the statutory tax rate, income tax expense decreased by $128.4 million (an impact of approximately $1.17 and $1.15 per basic and diluted share, respectively) in fiscal 2022 and $74.3 million (an impact of approximately $0.65 and $0.64 per basic and diluted share, respectively) in fiscal 2021 as a result of these agreements. employment certain of 3, as April The Company’s gross unrecognized tax benefits totaled $144.1 million as of April 2, 2022, and 2021, $134.1 million these $119.2 million as of March 28, 2020. Of amounts, $137.5 million, $128.7 million and $114.8 million as of April 2, 2022, April 3, 2021 and March 28, 2020, 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 $134.1 million as of April 3, 2021 to $144.1 million as of April 2, 2022, 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 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 A reconciliation of fiscal 2020 through fiscal 2022 beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): 2022 Fiscal Year 2021 2020 Beginning balance $134,068 $119,222 $103,178 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 11,826 10,048 10,357 3,049 6,240 6,484 (1,669) (348) (69) (3,219) (1,094) — — (728) — Ending balance $144,055 $134,068 $119,222 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 the Company recognized 2022, 2021 and 2020, $(5.1) million, $0.8 million and $0.7 million, respectively, of interest and penalties related to uncertain tax positions. Accrued interest and penalties totaled related $1.0 million, $6.2 million and $5.4 million as of April 2, 2022, April 3, 2021 and March 28, 2020, respectively. unrecognized benefits tax to The unrecognized tax benefits of $144.1 million and accrued interest and penalties of $1.0 million at the end of fiscal 2022 are recorded on the Consolidated Balance Sheet as a $13.8 million other long-term liability, with the balance reducing the carrying value of the gross deferred tax assets. to the timing if any, regarding uncertainties Due of examinations and the amount of settlements that may be paid, the Company currently believes it is reasonably possible that only a minimal amount of gross unrecognized tax benefits will be reduced for tax positions taken in prior years within the next 12 months. to tax authorities, in and state federal income tax Qorvo files a consolidated U.S. return, as well as separate and combined income tax international returns numerous jurisdictions. Qorvo’s fiscal 2019 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 61 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements 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): Fiscal Year 2022 2021 2020 Numerator: Numerator for basic and diluted net income per share — net income available to common stockholders $1,033,353 $733,611 $334,325 Denominator: Denominator for basic net income per share — weighted average shares 110,196 114,034 117,007 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 1,350 1,982 2,286 111,546 116,016 119,293 $ $ 9.38 $ 6.43 $ 9.26 $ 6.32 $ 2.86 2.80 In the computation of diluted net income per share for fiscal years 2022, 2021 and 2020, an immaterial number of shares were excluded because the effect of their inclusion would have been antidilutive. 15. STOCK-BASED COMPENSATION Summary of Stock Plans of the upon closing 2009 and 2012 Incentive Plans — TriQuint Semiconductor, Inc. Effective the Business Combination, the Company assumed the TriQuint, Inc. Inc. 2012 2009 Incentive Plan and the TriQuint, 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, and directors, independent 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 not exceed ten years. No further awards can be granted under these plans. Incentive Plans consultants, contractors advisors TriQuint TriQuint agents, could and the of 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 Business Company connection with the in 62 stock rights, restricted 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 2, 2022, 2.6 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 2022 under the 2012 Plan was 0.1 million shares. of the upon closing 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 the grant of stock options, Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 and agents, advisors 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 the the closing of its affiliates after Company or 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 2, 2022, 0.5 million shares were available for issuance under the 2013 Incentive Plan. inducement 2015 Inducement Stock Plan — Qorvo, Inc. The 2015 Inducement Stock Plan (the “2015 Inducement Plan”) provides for the grant of equity 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 2022, 2021 and 2020. As of April 2, 2022, 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 last day of each common stock on the first or six-month purchase period. At April 2, 2022, 3.0 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 0.3 million the closing price per share of shares under the ESPP in fiscal 2022, 0.4 million shares in fiscal 2021 and 0.5 million shares in fiscal 2020. For fiscal years 2022, 2021 and 2020, the primary stock-based awards and their general terms and conditions are as follows: Restricted stock units granted by the Company in fiscal years 2022, 2021 and 2020 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 directors to generally vest over a one-year period from the grant date. In fiscal 2022, each non-employee director was eligible to receive an annual grant of restricted stock units. non-employee granted units 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 $19.7 million was recognized upon the grant of 0.1 million restricted share units to certain officers of the Company. compensation stock-based 2022, 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 $83.5 million, $89.3 million and $76.0 million, for fiscal years 2022, 2021 and 2020, respectively, net of expense capitalized into inventory. 63 258 $15.67 1.04 $27,270 Balance at April 2, 2022 1,539 $126.46 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements 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) 458 $17.21 — — (193) $18.57 (7) — $35.37 — Outstanding as of April 3, 2021 Granted Exercised Canceled Forfeited Outstanding as of April 2, 2022 Vested and expected to vest as of April 2, 2022 Options exercisable as of April 2, 2022 258 $15.67 1.04 $27,270 258 $15.67 1.04 $27,270 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $121.51 as of April 1, 2022 (the last Nasdaq trading day prior to the fiscal year end on April 2, 2022), 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 2, 2022, 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 2022, 2021 and 2020. intrinsic value of options exercised during The total fiscal years 2022, 2021 and 2020 was $27.1 million, $66.7 million and $65.1 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 $36.9 million for fiscal 2022 and is reflected in cash flows from financing activities in the Consolidated Statement of Cash Flows. The Company settles employee stock options with newly issued shares of the Company’s common stock. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent from those periods forfeitures differ if actual 64 estimates. Based upon historical pre-vesting forfeiture experience, the Company assumed an annualized forfeiture rate of 1.4% for both stock options and restricted stock units. 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 April 3, 2021 1,859 $ 93.22 Granted Vested Forfeited 670 (874) (116) 185.26 87.78 124.95 total remaining unearned As of April 2, 2022, related to unvested restricted compensation cost stock units was $121.0 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. The total intrinsic value of restricted stock units that vested during fiscal years 2022, 2021 and 2020 was $163.6 million, $121.8 million and $67.7 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. On May 5, 2021, the Company announced that its Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of the Company’s outstanding common stock, which included approximately $236.9 million authorized on October 31, 2019, which was terminated concurrent with the new authorization. As of April 2, 2022, there was $861.7 million of availability under the share repurchase program. program announced under the Under the Company’s share repurchase programs, repurchases are made in accordance with applicable securities laws on the open market or in privately to which the negotiated transactions. The extent Company repurchases its shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory requirements, other alternative opportunities investment and Notes to Consolidated Financial Statements considerations. The current 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. repurchased 7.3 million shares, The Company 3.6 million shares and 6.4 million shares of its common stock during fiscal years 2022, 2021 and 2020, of $1,152.3 million, $515.1 million and $515.1 million, respectively. respectively, aggregate cost an at Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Common Stock Reserved For Future Issuance At April 2, 2022, the Company had reserved a total of authorized approximately 8.2 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 258 3,424 2,984 1,539 8,205 17. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION The Company’s operating and reportable segments as of April 2, 2022 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 CODM allocates resources and assesses the performance of each operating segment primarily based on operating income. MP is a global supplier of cellular, UWB, Wi-Fi and other wireless 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 a wide range of markets, including cellular and IT infrastructure, automotive, renewable energy, defense and IoT. The “All other” category includes operating expenses such as stock-based compensation expense, amortization of impairment, intangible assets, acquisition and integration related costs, restructuring related charges, goodwill fixed asset impairments, (loss) gain on sale of fixed assets, start-up costs and other miscellaneous corporate overhead expenses that the Company does not allocate to its operating segments because these expenses are not included in the segment operating performance measures evaluated by the Company’s CODM. The Company’s operating segments do not record intercompany revenue. The Company does not allocate gains and losses from investments, interest and other income (expense) or taxes to operating segments. The CODM does not evaluate operating segments using discrete asset information. Except as discussed above regarding the “All other” category, the Company’s accounting policies for segment reporting are the same as for the Company as a whole. The following tables present details of the Company’s operating and reportable segments and a reconciliation of the “All other” category (in thousands): Revenue: MP IDP Total revenue Operating income (loss): MP IDP All other Operating income Interest expense Other income (expense), net Income before income taxes 2022 Fiscal Year 2021 2020 $3,545,253 $2,856,813 $2,397,740 1,100,461 1,158,494 841,401 $4,645,714 $4,015,307 $3,239,141 $1,290,132 $1,008,171 $ 715,514 261,511 283,507 145,295 (325,574) (385,051) (437,593) 1,226,069 906,627 423,216 (63,326) 18,341 (75,198) (24,049) (60,392) 32,265 $1,181,084 $ 807,380 $ 395,089 65 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2022 Notes to Consolidated Financial Statements Reconciliation of “All other” category: Stock-based compensation expense Amortization of intangible assets Acquisition and integration related costs Restructuring related charges Goodwill impairment Other (1) Loss from operations for “All other” 2022 Fiscal Year 2021 2020 $ (83,507) $ (89,322) $ (75,978) (246,563) (252,137) (61,891) (32,946) (47,869) (2,722) — — (5,292) (7,924) (150,128) (27,964) (2,121) (48,000) (13,854) $(325,574) $(385,051) $(437,593) (1) Other includes fixed asset impairments, (loss) gain on sale of fixed assets, start-up costs and other miscellaneous corporate overhead expenses. The consolidated financial statements include revenue to customers by geographic region (based on the location of the customers’ headquarters) that are summarized as follows (in thousands): Revenue: United States China Other Asia Taiwan Europe Total Revenue 2022 Fiscal Year 2021 2020 $1,928,403 1,499,212 620,620 345,869 251,610 $1,631,110 1,579,017 363,523 248,708 192,949 $1,468,358 1,106,679 340,400 169,337 154,367 $4,645,714 $4,015,307 $3,239,141 The consolidated financial statements include the following long-lived tangible asset amounts related to operations of the Company by geographic region (in thousands): Long-lived tangible assets: United States China Other countries April 2, 2022 April 3, 2021 $1,007,463 192,416 53,712 $1,011,686 200,346 53,999 66 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 2, 2022 and April 3, 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 2, 2022, 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 2, 2022 and April 3, 2021, and the results of its operations and its cash flows for each of the three years in the period ended April 2, 2022, 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 2, 2022, 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 20, 2022 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. 67 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 $755.7 million as of April 2, 2022, representing approximately 10% 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 20, 2022 /s/ Ernst & Young LLP 68 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 2, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Qorvo, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 2, 2022, 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 2, 2022 and April 3, 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 2, 2022, and the related notes and our report dated May 20, 2022 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 Raleigh, North Carolina May 20, 2022 /s/ Ernst & Young LLP 69 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 Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding our required disclosure. 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. communicated accumulated and to As of the end of the period covered by this report, the Company’s management, including our Chief Executive Officer and Interim 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 Interim Chief Financial Officer concluded that the Company’s disclosure controls 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 Interim 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 it files or submits under the Exchange Act is accumulated and communicated the Company’s management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. to for financial statements internal those board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of 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 2, 2022. 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 2, 2022, based on Control-Integrated the 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 2, 2022, which is included in this Annual Report on Form 10-K under Part and Item 8, Supplementary Data.” Statements “Financial 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 2, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. (b) Management’s assessment of internal control over financial reporting Not applicable. 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 Interim Chief Financial Officer and effected by our the Exchange Act. Our internal control over 70 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. of Information required by this Item may be found in our for our 2022 Annual definitive proxy statement Meeting captions the under Stockholders “Corporate Governance,” “Executive Officers” and “Proposal 1 — Election of Directors,” and the information by reference. incorporated therein herein is 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. Information required by this Item may be found in our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the captions “Executive Committee Compensation” the Interlocks and information by reference. Participation,” incorporated and Insider is “Compensation and herein therein Information required by this Item may be found in our definitive proxy statement for our 2022 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 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 2022 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 2022 Annual Meeting of Stockholders under the captions “Proposal 3 — Ratification of Appointment of Independent Registered Public Accounting Firm” and “Corporate Governance,” is incorporated herein by reference. information therein and the 71 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as part of this report: (1) Financial Statements i. Consolidated Balance Sheets as of April 2, 2022 and April 3, 2021. ii. Consolidated Statements of Income for fiscal years 2022, 2021 and 2020. iii. Consolidated Statements of Comprehensive Income for fiscal years 2022, 2021 and 2020. iv. Consolidated Statements of Stockholders’ Equity for fiscal years 2022, 2021 and 2020. v. Consolidated Statements of Cash Flows for fiscal years 2022, 2021 and 2020. 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. 72 Exhibit No. 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 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 Computershare Trust Company, N.A., 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 Computershare Trust Company, N.A., 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 Computershare Trust Company, N.A., 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 Computershare Trust Company, N.A., 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) Indenture, dated as of December 14, 2021, among Qorvo, Inc., the Guarantors party thereto and Computershare Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on December 14, 2021) Registration Rights Agreement, dated as of December 14, 2021, by and among Qorvo, Inc., the Guarantors named therein and BofA Securities, Inc., as representative of the several Initial Purchasers named therein (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on December 14, 2021) 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 (incorporated by reference to Exhibit 10.1 to the further amended, effective February 8, 2017) 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))* 73 Description 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))* 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))* 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))* Qorvo, Inc. Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the 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))* 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)* (Performance-Based Award for Senior Officers (TSR)) Form of Restricted Stock Unit Agreement 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)* (deferral Form of Restricted Stock Unit Award Agreement 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)* Exhibit No. 10.9 10.10 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 74 Exhibit No. 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 21 22 23.1 31.1 31.2 32.1 32.2 101 104 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) 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)* 2021 Declaration of Amendment to Qorvo, Inc. 2007 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K filed with the SEC on May 24, 2021)* Severance Agreement and Release of All Claims, dated February 27, 2022, by and between James Klein and Qorvo US, Inc.* Advisory Agreement, dated March 1, 2022, by and between James L. Klein and Qorvo Biotechnologies, LLC LIBOR Transition Amendment, dated April 6, 2022, to Amended and Restated Credit Agreement, by and among Qorvo, Inc., as the Borrower, and Bank of America, N.A., as Administrative Agent 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 Grant A. Brown, as Interim 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 Grant A. Brown, as Interim Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (ii) the Consolidated Statements of The following materials from our Annual Report on Form 10-K for the fiscal year ended April 2, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements. The cover page from our Annual Report on Form 10-K for the year ended April 2, 2022, formatted in iXBRL Income; (iii) * 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. 75 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 20, 2022 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 Grant A. Brown 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 20, 2022. /S/ ROBERT A. BRUGGEWORTH Name: Robert A. Bruggeworth Title: President, Chief Executive Officer and Director (Principal Executive Officer) /S/ GRANT A. BROWN Name: Grant A. Brown Title: Vice President of Treasury and Interim 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 76 7628 Thorndike Road | Greensboro, NC 27409 www.qorvo.com 

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