Qorvo
Annual Report 2023

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 1, 2023 or 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 offices) 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 Securities registered pursuant to Section 12(g) of the Act: None 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 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ‘ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘ 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 $8,073,738,818 as of October 1, 2022. 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 12, 2023, there were 98,736,229 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 2023 annual meeting of stockholders, which is expected to be filed within 120 days after the end of the registrant’s fiscal year ended April 1, 2023. QORVO, INC. FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 1, 2023 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. Exhibit and Financial Statement Schedules. Item 16. Form 10-K Summary. Exhibit Index. Signatures. PART IV 2 Page 3 3 10 23 24 24 24 24 26 27 36 38 72 72 72 72 73 73 73 73 73 74 74 75 78 In this Annual Report on Form 10-K, the words “Qorvo,” “we,” “our,” “ours,” “us” and “the Company” refer only to Qorvo, Inc. and our 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 These “forecast,” “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 terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. Additionally, statements concerning future matters such as our future business, prospects, results of operations, financial condition or research and development or technology investments; new or enhanced technologies; emerging industries or business models; design wins or product launches; industry, market or technology trends, dynamics or transitions, such as technology supply upgrade cycles; our strategic conditions investments, acquisitions or divestitures, and the anticipated timing or benefits thereof; continued impacts of the COVID-19 pandemic; legal or regulatory matters; U.S./China trade and national security tensions; the war in Ukraine; vertical integration by our customers; statements regarding matters that are not historical are also forward-looking statements. future demand or or macroeconomic competition; products, services factors; other and or 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. factors that could cause actual results to Material 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 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 parties of the risks and factors that may affect our results of operations business, and prospects. financial condition, 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. to three operating segments In the second quarter of fiscal 2023, we updated our organizational structure from two operating segments (Mobile Products and Infrastructure and Defense (High Products) Performance Analog (“HPA”), Connectivity and Sensors Group (“CSG”) and Advanced Cellular Group (“ACG”)). This change was made to more closely align technologies and applications with customers and end markets. All prior-period segment data has been adjusted to reflect these three operating segments. As part of the new organizational structure, we also centralized the sales teams formerly within our two prior segments into a single global sales force. We believe our global sales force enables us to more quickly capitalize on opportunities across customers and markets to accelerate long-term diversified growth. and sensor solutions, with HPA is a leading global supplier of radio frequency (“RF”) and power solutions for automotive, defense and aerospace, cellular infrastructure, broadband and other markets. CSG is a leading global supplier of connectivity broad expertise spanning ultra-wideband (“UWB”), Matter®, Bluetooth® Low Energy, Zigbee®, Thread®, Wi-Fi®, of cellular (“IoT”), (“MEMS”)-based system microelectromechanical sensors and bulk acoustic wave (“BAW”)-based sensors. ACG is a leading global supplier of cellular RF solutions laptops, for tablets and other devices. smartphones, wearables, Internet Things 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 have design, sales and other manufacturing facilities throughout Asia, Europe and North America. We also source products and materials through external suppliers. In addition to organic growth, our strategy includes the potential acquisition of businesses, assets and technologies that complement our existing capabilities and enable us to drive growth in new or existing markets. 3 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Industry Trends, Markets and Products Global connectivity trends and the proliferation of smarter, data-driven, connected devices are increasing data traffic and raising requirements for the efficiency and throughput of wireless and wired networks. At the initiatives and technology same time, environmental advancements related to sustainability are driving investments across a range of consumer, enterprise, and industrial applications requiring increasing power efficiency. This supports multiyear technology upgrade cycles and increases the demand for our technologies and products. cellular devices, infrastructure, Our business is diversified across markets, including mobile power management and conversion, IoT, connected home, defense and aerospace, and automotive. Our products solve our customers’ most complex RF and power- related challenges while enhancing performance, improving efficiency, increasing functionality, reducing complexity, shrinking form factors and addressing other critical challenges. laptops, Mobile Devices Qorvo’s largest market is mobile devices, which is a It global market characterized by large volumes. includes smartphones, wearables, tablets and other devices. Our products for mobile devices include highly integrated RF solutions featuring filters, other switches, components leveraging multiple process technologies in a miniaturized form factor. Our portfolio also circuits includes and system-on-a-chip (“ICs”), system-in-package (“SiP”) solutions, MEMS-based sensors, antenna tuners, antennaplexers, as well as discrete multiplexers, duplexers, filters, and switches. power management UWB amplifiers, multiplexers integrated (“SoC”) and Advances in mobile devices are transforming how end users around the world access content, interact with communities and transact commerce. The migration to 5G enables higher data throughput, lower signal latency and massive machine-type communication. 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-Output frequencies with wider bandwidths, and new paths featuring carrier aggregation. (“MIMO”), higher (“OEMs”) device are addition, mobile original equipment In manufacturers leveraging UWB’s precision-location accuracy to enhance functionality with applications that can offer secure remote access, indoor navigation and other functionality. They are also seeking sensor technology to enhance human-machine interfaces, create new consumer experiences and advance industrial design. force-sensing adopt touch to These challenges and the increases in functionality and complexity are driving requirements for high performance and highly integrated RF solutions. 4 Cellular Infrastructure Operators of cellular base stations are migrating to 5G to increase capacity, expand coverage and lower the cost per bit of data delivered. This is enabling new data-driven intelligent applications that combine global including connectivity with advanced capabilities, artificial intelligence and machine learning. New use cases include industrial automation, robotics, remote medical care, autonomous vehicles and augmented reality/virtual reality (“AR/VR”). 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. Our cellular base station products include switches, low noise amplifier variable gain (“LNA”) modules, amplifiers, integrated power amplifier (“PA”) Doherty modules, discrete LNAs and high power amplifiers and power amplifier modules combining high power amplifiers with small signal content. These products leverage deep expertise across technologies including gallium nitride (“GaN”) and gallium arsenide (“GaAs”). 5G networks operate over a wide range of frequencies, and deployments can vary with spectrum allocation, regional demographics, geopolitical considerations and other factors. In the U.S., the allocation of C-band frequency has supported the deployment of base stations operating in the sub-7 GHz frequency range. Many of these base stations are configured with massive MIMO active antenna arrays, which increases the number of RF transmit and receive channels. Base stations operating over millimeter wave frequencies capacity deployed are requirements and high-density support applications such as fixed wireless access. environments being in address also to in electric 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 (“EVs”)/hybrid-EVs, vehicles trends renewable energy systems, battery-operated portable devices, EV chargers, on-board chargers, data storage, circuit are sharpening the focus on power efficiency and increasing the demand for our power management and power conversion solutions. applications, protection similar and Qorvo’s silicon carbide (“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. power management include Qorvo’s programmable power management ICs and power application controllers (PACs®). Our programmable power management ICs provide customers digital and solutions analog power control. They reduce solution size, lower improve system reliability and shorten our cost, customers’ product development time. Our power management products manage voltages from 1.8V to 600V and power up to 4,000 watts. IoT and Connected Home The proliferation of data-driven connected devices that sense, process and communicate is increasing demand for wireless connectivity solutions that reduce latency, increase throughput and capacity, enhance security, and maximize efficiency. Use cases in IoT applications include connected cars, cloud gaming, AR/VR, telemedicine and factory automation. commercial consumer, industrial and of including applications Connected home devices allow remote access and control entertainment, comfort, health monitoring, and property monitoring and security. These devices can be controlled through a computer, tablet or smartphone, or through a direct peer-to-peer device such as a voice-enabled remote control, tablet or home control assistant. In Wi-Fi, new standards and architectures, such as 802.11ax (Wi-Fi 6), Wi-Fi 6E and Wi-Fi 7, are enhancing performance, increasing range and capacity, and enabling new use cases. The upcoming Wi-Fi 7 standard will double the channel bandwidth and number of spatial streams compared to 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 longer distances. As enable faster speeds over 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 solutions including front end modules (“FEMs”) and iFEMs featuring integrated filters. developed In lower power applications, smart device OEMs increasingly prefer multi-protocol integrated SoCs that enable multiple radios to connect concurrently. The coexistence of multiple low power wireless protocols, such as Bluetooth Low Energy, Zigbee, and Thread, in single-placement SoCs reduces form factor, extends battery life and advances the proliferation of IoT devices. Matter is an open and universal smart home simplify multi-protocol overlay interoperability and accelerate adoption of IoT devices and platforms. Lastly, UWB is enabling new use cases that require precision location accuracy and security, including secure home access, secure car access, indoor navigation and other applications. Qorvo’s low power portfolio includes multi-protocol (Bluetooth Low Energy, Zigbee and Thread) SoC solutions, single standard UWB SoCs, and UWB SiP solutions that firmware and application consist of SoC hardware, software. to Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 applications and communications systems. Within these markets, the adoption of phased array radar, the introduction of new frequency bands and the shift to higher frequencies are expanding the opportunity for our products and technologies. 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 packaging technologies. semiconductor and PAs array radars support Our and phased 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. (“V2X”) Automotive In automotive markets, new use cases including vehicle-to-everything communications, advanced connectivity services, and secure car access, are supporting the migration to more connected, more intelligent vehicles. These new use cases are driving increased content across multiple connectivity and sensing including cellular, V2X, Wi-Fi, satellite radio, MEMS-based force- sensing, and UWB. Our force-sensing touch sensors interface enable experience in automotive smart interior applications. Our UWB solutions leverage ultra-low latency and precision location accuracy to enable digital key access and digital key sharing while reducing the risk of “man-in-the-middle,” or “relay” attacks possible with legacy technologies. human-machine technologies, enhanced an Similarly, electrification trends and the adoption of EVs/hybrid-EVs are increasing the need for more efficient power delivery solutions and increasing requirements for semiconductor content in automotive markets. increasing adoption of compound semiconductor technologies such as SiC. supports This Our connectivity and sensor products for automotive applications include BAW filters, LNAs, switches, PAs, front-end solutions, force-sensing touch sensors, and UWB solutions. Our automotive power products include traction inverters, on-board chargers, and DC/DC converters. Our products meet or exceed automotive AEC-Q100 quality and reliability standards, and our customers include market leading automotive Tier-1 suppliers. Defense and Aerospace In defense and aerospace, Qorvo focuses primarily on high-power phased array radar, electronic military Research and Development We invest in research and development (“R&D”) to develop advanced technologies and products to best serve our markets. Our R&D activities support large 5 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 at key which customers, competitive design win opportunities for major require programs best-in-class performance, size, cost and functional density. We also invest in R&D to develop new products for broader market applications. Our R&D and continuous efforts innovation in fundamental areas including materials, software, technologies, simulation and modeling, systems architecture, circuit design, device packaging, module integration and test capabilities. semiconductor improvement process focus on 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 silicon on insulator (“SOI”) for switches and for amplifiers, tuners, silicon germanium (“SiGe”) 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, (“IP”) and other expertise to improve performance, increase integration and reduce the size and cost of our products. intellectual property and qualify develop advanced packaging We technologies to reduce component size, improve performance and reduce package costs. We also invest in large scale module assembly and test capabilities to bring these technologies to market in very high volumes. Raw Materials 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, lithium niobate and raw materials include silicon, 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. We enter into supply agreements, for certain items, to address short-term and long-term supply requirements during periods of semiconductor industry supply constraints. Our manufacturing strategy includes a balance of internal and external capacity. Our manufacturing sites are geographically distributed, as are our suppliers. We routinely qualify additional manufacturing sites and sources of supply to reduce the risk of supply interruptions or price increases, and we closely monitor our suppliers’ key performance indicators. We seek to ensure that materials and manufacturing services are available from multiple sources and geographic locations. 6 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 technologies, including SiC, SOI, SiGe and bulk CMOS, which are principally sourced from leading silicon foundries located throughout the world. We have a global supply chain and ship millions of units per day. We have our own flip chip, wire bond and wafer-level packaging technologies. We primarily use internal assembly facilities in China, Costa Rica, Germany and the U.S., and we also use external suppliers located in Asia 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 inspections quality numerous conduct throughout the production flow. control Our internal manufacturing facilities require a high level of fixed costs, consisting primarily of occupancy costs, maintenance, repair, equipment depreciation, and labor costs related to manufacturing and process engineering. Semiconductor fabrication requires highly controlled and clean environments. Die on a wafer can be found to be nonfunctional or wafers can be rejected due to a number of including minute impurities, variances in the fabrication process or defects in the masks used to transfer circuit patterns onto the wafers. reasons, internal self-audits. Our manufacturing facilities worldwide are certified to the 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 ISO 9001 continuous standard is based on a number of quality management principles including a strong customer the motivation of top management, the process approach and continual improvement. IATF 16949 is the highest international quality standard for the global automotive industry additional requirements for the automotive industry. AS 9100 is the standardized quality management system for the aerospace industry. ISO 14001 is an internationally Environmental agreed incorporates standard specific focus, upon and The for an Management System (“EMS”). We require that all of our key vendors and suppliers be compliant with applicable standards. and solutions Customers We design, develop, manufacture and market our products and international OEMs and original design manufacturers (“ODMs”). We also collaborate with leading reference design partners and provide foundry services to defense primes and other defense and aerospace customers. leading U.S. for We provide products to our largest end customer, Apple Inc. (“Apple”), through sales to multiple contract manufacturers, which in the aggregate accounted for 37% and 33% of total revenue in fiscal years 2023 and 2022, respectively. Samsung Electronics Co., Ltd. (“Samsung”) accounted for 12% and 11% of total revenue in fiscal years 2023 and 2022, 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 representative firms and distributors based on technical skills and sales experience, the presence lines and the customer of complementary product base served. We provide ongoing educational training about our products to our internal and external sales representatives and distributors. We maintain an is internal sales and marketing organization that responsible for key account management, application engineering and advertising literature, and technical presentations for industry conferences. Our sales and customer support centers are located near our customers throughout the world. customers, support sales for Our website contains extensive product information and includes an online store where customers can learn about our products, download product catalogs, order product samples and request evaluation boards. Our global team of application engineers interacts with customers during all stages of design and production, maintains regular contact with customer engineers, provides product application notes and engineering data, and assists in the resolution of technical problems. We maintain close relationships with our customers and 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 2023 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. Technologies Inc.; HPA competes primarily with Analog Devices, AG; MACOM Technology Infineon Solutions Holdings, Inc.; NXP Semiconductors N.V.; ON Semiconductor Corporation; STMicroelectronics N.V.; Sumitomo Electric Device Innovations; Texas Instruments, Inc.; and Wolfspeed, Inc. CSG competes primarily with Broadcom Inc.; Nordic Semiconductor; NXP Semiconductors N.V.; Qualcomm Technologies, Inc.; Silicon and Skyworks Solutions, Inc. ACG competes primarily with Broadcom Inc.; Murata Manufacturing Co., Ltd.; Qualcomm Technologies, Inc.; and Skyworks Solutions, Inc. Laboratories Inc.; capabilities. Many of our current and potential competitors have strong market positions and customer relationships, IP, and substantial established patents and other our some In technological competitors are also our customers or suppliers. Additionally, many of our competitors have significant financial, technical, manufacturing, and marketing resources, which may allow them to more quickly implement new technologies and develop new products. cases, 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 IP rights to deter monitor and protect our global 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 strategic countries where we have a market presence. On occasion, some applications do not mature into patents for various reasons, including rejections based on prior art. We have approximately 2,250 patents that have expiration dates between 7 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 of pace product 2023 and 2041. We also continue to acquire patents through acquisitions or direct prosecution efforts and engage in licensing transactions to secure the right to rapid use third-parties’ patents. In view of our and development innovation the and patenting governments’ comparative processes, there is no guarantee that patented technology for our products and services 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, we confidentiality agreements to protect our interest in confidential and proprietary information that gives us a competitive advantage, including business strategies, unpatented inventions, designs, and process technology. Such information is closely monitored and made available only to those employees whose responsibilities require access to the information. and Human Capital We believe that our employees are our greatest assets, and we must continue to attract, develop, retain and motivate our employees to remain competitive and execute our business strategy. We strive to meet these objectives by offering competitive pay and benefits in a diverse, inclusive and safe workplace and by providing opportunities for our employees to grow and develop their careers. As of April 1, 2023, we employed over 8,500 full and part-time employees in 23 countries. By region, approximately 55% of our total employees were in the Americas, 38% in Europe. Approximately 61% of our global population was in engineering or technician roles. and 7% in Asia Competitive Pay and Benefits 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 accounts, paid time off, family leave, family care resources, flexible work schedules, 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. 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 student populations for our internship program. We believe university that partnerships the next including engineers in our generation of industry, and provides a pipeline of recent college graduates into our talent pool. program and contribute to developing universities with internship diverse talent, our We support a high performance culture through ongoing performance development mentoring aligned with our annual review process. We offer learning and development solutions to develop strategically aligned competencies. Our learning e-learning pathways and educational assistance provide our employees with robust development opportunities to help build goals, their management skills and lead their organizations. them achieve libraries, career promote We believe our competitive compensation and benefits programs, along with career growth, development and internal mobility longer opportunities employee tenure and reduce turnover. We regularly monitor employee turnover, as given the nature of our business, our success depends upon retaining highly trained personnel with the technical skills necessary to execute on our business objectives. 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 team members. Diversity and ideas of our global 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. To further drive accountability, certain diversity, equity and inclusion objectives are linked to executive and senior leader compensation. These and other efforts help promote an inclusive workplace of talented employees and drive employee engagement. partnering workplace through gender, include race 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 ensure standards chains, among other things. As a member of the RBA, we have adopted the RBA Code of Conduct, which establishes that working to conditions are safe, that employees are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. The RBA Code of Conduct has been reflected in our employee policies and procedures. In addition, Qorvo is committed to complying with applicable laws and regulations of the countries in which we operate and supporting ethical labor practices that do not infringe on human rights. for provide 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 fiscal 2023, we achieved our safety goal for the fifth consecutive year. Our site-specific health and safety teams are critical in fostering a positive safety culture. Team members utilize our online near miss and hazard reporting system, a system critical to prevent worker injury. training The success of our business is fundamentally connected to the well-being of our employees. We provide our employees with work arrangements that support flexibility, while maintaining our strong culture innovation, collaboration and camaraderie. We of 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; Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 ‰ sourcing raw material responsibly; and ‰ 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’ requirements. are example, 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 EMS in place to help ensure control of the manufacturing the environmental aspects of process. Our and establishes appropriate checks and balances to minimize the potential for non-compliance with environmental laws and regulations. EMS mandates manufacturer compliance 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 regulations, and business. These controls, restrictions (including those related to, or affected by, United States-China relations, as discussed below in Item 1A, “Risk Factors”) may have a material impact on our business, including our ability to sell products and to manufacture or source components. tariffs, Government regulations are subject to change, 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 receive regular briefings on cybersecurity matters. Qorvo’s cybersecurity program includes, but is not limited to: ‰ annual cybersecurity budget planning across all IT disciplines; ‰ enterprise security policies and procedures that guide our cybersecurity program; ‰ a combination of broad cybersecurity training for all specific training for employees and sensitive roles and functions; targeted ‰ prioritization of system and process criticality and sensitivity to apply enhanced security protections to 9 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 the most business-critical areas of the company and the most sensitive information; ‰ review and continual monitoring of Qorvo’s security posture and security-related events; ‰ review and continual monitoring of the security posture of critical third parties (e.g., suppliers and service providers); ‰ exercise of Qorvo’s preparedness for incidents through incident response exercises and root cause analysis of actual and near-miss incidents; ‰ collaboration with Qorvo leadership to identify and address emerging cybersecurity risk and compliance business considerations regulatory priorities, contractual compliance obligations; on acquisitions, requirements, ‰ regular cybersecurity information-sharing with peer organizations, industry groups, and federal agencies; in-house cybersecurity services with ‰ integration of business changing based and 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 accessible 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 and adversely impacted by any of these risks. The risks and uncertainties described below are not 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. the only ones we face. Additional in 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 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 ‰ Overcapacity could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance. ‰ We are subject to risks from international sales and our 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, 10 which may not be successful or on terms favorable to us. ‰ Our acquisitions and other strategic investments could fail financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. to achieve our ‰ 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 IP portfolio and may not be able to successfully protect against the use of our IP by third parties, and we may be subject to claims of infringement of third-party IP 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 on a quarterly and annual basis. Our revenue, earnings, margins and other operating results have fluctuated significantly in the past and may fluctuate significantly in the future. Historically, worldwide semiconductor industry sales have tracked the impacts of financial crises, subsequent recoveries and persistent economic uncertainty. Recent global economic slowdowns could continue and potentially result in certain economies dipping into economic recessions, including the United States. If demand for our products fluctuates as a result of economic conditions or revenue and 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; pressures, across jurisdictions in which we do business, resulting in increased costs or reduced demand for our products due to increased prices of those products; ‰ inflationary ‰ changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, unemployment levels, energy or other 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 which vary products accurately; ‰ the ability of third-party foundries and other third- party suppliers to manufacture, assemble and test Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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; that ‰ delays in the widespread deployment and commercialization of new technologies; ‰ our ability to achieve cost savings and improve yields and margins on our new and existing products; ‰ our ability integrate into our business, and realize the expected benefits of, our acquisitions and strategic investments; and to successfully ‰ our ability to align production capacity to customer demand, which may lead to underutilization of our capacity in periods of lower demand or the lack of capacity in periods of excess demand. future Our operating results have been and our 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 or forecasts 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 new form factors. Our largest customers typically their product portfolios by refresh some or all of In some cases, releasing new models each year. either represent designs we product 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. pursue 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 development depends on a number of factors, 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; 11 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 ‰ acceptance of our new product designs; ‰ the availability of qualified product design engineers; ‰ our timely completion of product designs and ramp up of new products according to our customers’ needs with acceptable manufacturing yields; and ‰ market acceptance of our customers’ products and the duration of the life cycle of such products. major pursue Most that we We may not be able to design and introduce new products in a timely or cost-efficient manner, and our new products may fail to meet market or customer product requirements. design opportunities involve multiple competitors, and we could lose a new product design opportunity to a competitor that offers a lower cost or equal or superior performance. If we are unsuccessful in achieving design wins, our revenue and operating results will be adversely affected. Even when a design win is achieved, our success is not assured. Design wins may require significant expenditures by us and typically precede a higher volume revenue by six to nine months or more. Many customers seek a second source for all major components in their devices, which can significantly reduce the revenue obtained from a design win. In many cases, the average selling prices of our products decline over the products’ lives, 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 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 49%, 44% and 39% of our revenue for fiscal years 2023, 2022 and 2021, 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. 12 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 States government-sponsored programs, principally for defense and aerospace applications. These programs are subject to delays or cancellation. Further, spending on defense and aerospace programs can vary significantly depending on funding from the United States government. We believe our government and defense and aerospace business has been negatively affected in the past by external factors such as sequestration and political pressure to reduce federal defense spending. Reductions in defense and aerospace funding or the loss of a significant defense and aerospace program or contract would have a material adverse effect on our operating results. of the industry The effects of the COVID-19 pandemic continue to adversely affect our business operations. The COVID-19 pandemic has been a contributing supply semiconductor factor constraints and may continue to cause volatility and worldwide uncertainty economies have experienced, and may experience, 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. customer financial markets. We demand, continue in and sources our to caused COVID-19 pandemic government The authorities to implement numerous public health measures, including quarantines, business closures, travel bans and lockdowns to contain the virus. We have experienced and may continue to experience disruptions to our business as these measures have, and may continue to have, an effect on our customer demand and operations. 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, and may amplify other risks discussed in these risk factors and throughout this report. 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. its unable beyond capacity to meet be achieve As the semiconductor industry continues to experience supply constraints for certain items, we entered into certain supply agreements to address short-term and long-term supply requirements. However, even with supply agreements, we are still subject to risks that a supply supplier will commitments, anticipated manufacturing yields, produce wafers on a timely basis, or provide additional wafer 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 new customer and 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, establish ability our its to Although our key suppliers commit to us to be compliant with applicable ISO 9001 and/or TS-16949 quality standards, we have experienced quality and 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 compete with our products, and we may need to incentivize the distributors to focus on the sale of our products. Our financial distributors may difficulties, including bankruptcy, which could harm our collection of accounts receivable and financial results. the Foreign Corrupt Practices Act or Violations of distributors’ technical support face Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 similar laws by our distributors or other third-party impact on our intermediaries could have a material business. Failure to manage risks related to our use of distributors may reduce sales, increase expenses, and weaken our 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 including the our business and financial 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 employees or third-party to international or U.S. laws relevant agents of foreign operations; ‰ our ability to hire, production personnel; train and manage qualified ‰ 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. industrial Business disruptions could harm our business, lead to a decline in revenue and increase our costs. Our worldwide operations and business could be, and in some cases have been, disrupted by natural disasters, cybersecurity 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 accidents, 13 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 events from these 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 require disruptions substantial expenditures and recovery time in order to fully resume operations and could also have a material adverse effect on our operations and financial results to the extent that losses are uninsured or exceed insurance recoveries, and to the extent that such disruptions adversely impact our relationships with our customers. Furthermore, even if our own operations are unaffected or recover quickly, if our customers 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. 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 integration and complexity. Our enhanced levels of 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. Defects in a single component in an assembled module product can impact the yield for the entire module, which means the adverse economic impacts of an individual defect can be multiplied many times over if we fail to discover the defect before the module is assembled. Due to the complexity of our products, we periodically experience difficulties in achieving acceptable yields and other quality issues, particularly with respect to new products. Furthermore, as our customers test our products once assembled into their products, we may be exposed to additional quality issues and costs. 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; 14 ‰ 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. These forecasts, however, do not represent binding purchase commitments and we do not recognize sales for these products until they are the customer. As a shipped to, or consumed by, result, and inventory manufacturing costs in advance of anticipated sales. 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 contract purchase customers manufacturers or hold component inventory levels than their consumption rate because this greater reduces our the customers’ regarding accumulated levels of inventory. significant indirectly visibility through incur we into Amidst ongoing industry-wide supply constraints, we entered reservation agreement with a foundry supplier during fiscal 2022. Under this agreement, we were required to purchase, and the foundry supplier was required to supply, a long-term capacity a certain number of wafers for calendar years 2022 through 2025. In connection with this agreement, we paid a refundable deposit, and if the purchase commitments per the agreement were not met, under certain circumstances the supplier could deduct the from the prepaid amount of the purchase shortfall refundable deposit at the end of each calendar year. the agreement supplier, which included extending During fiscal 2023, we experienced unexpectedly weakened demand for 5G handsets in China and EMEA due to unprecedented disruption resulting, in part, from measures taken in China to control the COVID-19 pandemic and the war in Ukraine. Although we renegotiated the terms of the agreement with the foundry the through calendar year duration of 2026, we were unable to meet the minimum purchase commitments under the amended agreement. As a result, we (1) recorded impairments to the prepaid refundable deposit, (2) recognized additional inventory reserves, and (3) adjusted our anticipated future commitment liability. To the extent that management’s assumptions pertaining to anticipated future demand are incorrect or there are further declines in customer forecasts, additional charges may be recorded in future periods, 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 integrated solutions that include their own RF technologies and components. certain air 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 competitive RF reference design, 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 they offer if Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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. 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 ICs and modules. In addition to our direct competitors, some of our largest end customers and leading platform partners also compete with us to some extent by designing and manufacturing their own Increased competition from any source products. 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 Many of our existing and potential competitors have entrenched market positions, historical affiliations considerable internal manufacturing with OEMs, capacity, established IP rights and substantial technological capabilities. The semiconductor industry has experienced increased industry consolidation over the last several years, a trend we expect to continue. Many of our existing and potential competitors may technical, manufacturing or have greater resources than we do. marketing Further, our competitors may substantially more secure government incentives and grants, such as funding available to U.S. semiconductor manufacturers under the Produce Semiconductors and Science Act. We cannot be sure that we will be able to compete successfully with our competitors. Incentives financial, Creating Helpful to 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 and to estimate future requirements for production capacity in order to 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. 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 trends and demand well 15 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 future demand patterns. these capacity additions exceeded the near-term demand requirements, leading to overcapacity situations and underutilization of our manufacturing facilities. In certain cases, results. As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenue experienced during periods of underutilization. Current macroeconomic conditions have created weakness in demand, which may continue. These conditions create elevated inventory levels at our customers, which in turn causes underutilization of our manufacturing facilities and higher inventory costs which adversely affects our gross margin and other operating If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which would increase our expenses. For example, to address manufacturing overcapacity, we idled a BAW manufacturing facility in Texas in fiscal 2021, and subsequently classified the facility as held for sale in fiscal 2023. These actions resulted in impairment charges, and other restructuring related charges and expenses. Unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates may adversely affect our financial condition, liquidity and results of operations. We may utilize hedging strategies from time to time to mitigate the impact due to underlying exposures such as interest rates, precious metal prices, utility rates, or currency exchange rates. However, the impact from these be predicted or hedged, and there can be no assurance that our hedging strategies will be effective in minimizing risk. exposures underlying cannot always technical capabilities, or Our acquisitions and other strategic investments could fail to achieve our financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. As part of our business strategy, we expect to continue to review potential acquisitions and strategic investments that could complement our current product offerings, augment our market coverage or enhance our that may otherwise or margin improvement opportunities. In the event of future acquisitions of businesses, products or technologies, we could issue equity securities that would dilute our current stockholders’ ownership, incur substantial debt or financial obligations or assume contingent other liabilities. Such actions could harm our results of operations or the price of our common stock. Acquisitions and strategic investments also entail numerous other risks that could adversely affect our growth offer 16 of and financial operations business, 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 capital requirements; ‰ acquisition-related charges and amortization of acquired technology and other intangibles; ‰ the potential loss of key employees from a company we acquire or in which we invest; ‰ diversion of management’s attention from our business; ‰ disruption of our ongoing operations; ‰ dis-synergies or other harm to existing business relationships with suppliers and customers; ‰ losses or impairment research of and investments development from by unsuccessful companies in which we invest; ‰ failure to successfully acquired businesses, operations, products, technologies and personnel; and integrate ‰ unrealized expected synergies. Moreover, our resources are limited and our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our financial or strategic objectives. Any of these risks could have a material adverse effect on our business, results of flows, operations, particularly in the case of a large acquisition. condition, financial cash or locations, adapt 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 to cultural norms of foreign locations, and train and motivate our employee base. Labor is further subject to external factors that are beyond our control, including our industry’s highly competitive market for inflation, and skilled workers and leaders, cost 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 attract qualified personnel. The competition for is intense, and the number of qualified personnel people with experience, particularly in RF engineering, integrated circuit and filter software engineering, design, and technical marketing and support, is limited. In addition, existing or new immigration laws, policies or regulations in the U.S. may limit the pool of available talent. Difficulties obtaining visas and other restrictions on international travel could make it more onerous to effectively manage our international operations, operate as a global company or service our international customer base. Changes in the interpretation and application of employment-related laws to our workforce practices may also result in increased operating costs and less flexibility in how we meet our changing workforce needs. Further, any transition from flexible work arrangements to more stringent on-site work requirements may result in higher employee attrition and make it more difficult for us to compete in the job market. We cannot be sure that we will be able to attract and retain skilled in the future, which could harm our personnel 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 and contracts 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 Changes in our effective tax rate may adversely impact our results of operations and cash flow. We are subject Singapore, jurisdictions. Our effective tax rate is subject to taxation in China, Germany, foreign to the U.S. and numerous other Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 factors, 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; ‰ the resolution of issues arising from tax audits with various tax authorities, including those described in Note 13 of the Notes to Consolidated Financial Statements; ‰ changes in the valuation of either our gross deferred tax assets or gross deferred tax liabilities; ‰ adjustments to income taxes upon finalization of various tax returns; ‰ changes purposes; 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. increase in our Any significant future effective tax rates could reduce net income and cash flow for future periods. In 2017, The enactment of international or domestic tax legislation, or changes in regulatory guidance, may adversely impact our results of operations and cash flow. 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 August 2022, the U.S. enacted the Inflation Reduction Act (“IRA”), establishing a new book minimum tax of 15% on consolidated adjusted GAAP pre-tax earnings for corporations with average income in excess of $1 billion. In addition, other countries in which we operate are beginning to implement legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and action plan, which aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing incentive documentation practices, allocating greater taxing rights to countries where customers are located, and establishing a minimum tax of 15% on global income. Legislative changes, interpretations and guidance, and changes in prior tax rulings and decisions by tax authorities regarding treatments and positions of corporate income taxes resulting from these initiatives, could increase tax uncertainty, increase our effective tax rate, and result in taxes we previously paid being nexus-based rules, tax 17 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 subject to change, which may adversely impact our financial position and results of operations. 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 revenue 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 our tax holiday status could have a negative effect on our net income in future years. The overall benefit derived from our tax holidays could also be adversely impacted by the future implementation of minimum tax regimes in countries in which we operate. 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. Such laws and regulations, as well reporting, vary as the associated frameworks for greatly by jurisdiction in which we do business and are continually evolving. Our failure to comply with any of these existing or regulations could future laws or result in: ‰ regulatory penalties and fines; ‰ legal liabilities, including financial responsibility for are properties our if remedial measures contaminated; to secure governmental approvals; ‰ expenses required permits and ‰ reputational damage; ‰ suspension or curtailment of our manufacturing, assembly and test processes; and ‰ increased costs to acquire pollution abatement or remediation equipment or to modify our equipment, facilities or manufacturing processes to bring them into and regulations. compliance applicable laws with Existing and future environmental laws and regulations could also impact our product designs and limit or restrict the materials or components that are included in our products. In addition, many of our largest end customers require us to comply with corporate social responsibility include employment, health, safety, environmental and other that requirements legal Further, an increasing number of requirements. applicable policies, exceed which often 18 social governance investors are also expecting companies to disclose (“ESG”) and environmental, 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. 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 there is increasing us and our suppliers. Finally, legislation globally which will require us to align programs to the expectations of investors, customers or other stakeholders and disclose an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy the evolving or execution quickly enough to meet and our expectations of regulators, or if our ESG data input, processing and reporting are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected. customers, investors, Risks Related to Our International Sales and Operations We are subject to risks from international sales and operations. We operate globally with sales offices and R&D activities as well as manufacturing, assembly and test facilities in multiple countries, and some of our business activities are concentrated in Asia. As a result, we are subject to regulatory, geopolitical and other risks associated with doing business outside the U.S., including: ‰ global and local economic, social and political conditions and uncertainty; ‰ currency controls and currency exchange rate fluctuations; ‰ 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, including ‰ labor market conditions and workers’ rights affecting those of our our manufacturing operations or customers or suppliers; ‰ disruptions in commodities trading markets; capital and securities and ‰ occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability such as the war in Ukraine, which may disrupt manufacturing, assembly, logistics, security and communications and result in reduced demand for our products; ‰ compliance with laws and regulations that differ among jurisdictions, including those covering taxes, IP ownership and infringement, imports and exports, and anti-corruption competition, and environment, health, and safety; anti-bribery, data antitrust privacy, cybersecurity, ‰ 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, which could adversely affect our business and our customer order patterns. and to customers Sales located outside the U.S. accounted for approximately 49% of our revenue in fiscal 2023, of which approximately 21% 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, heightened tensions between the U.S. and China, China and Taiwan, or other countries, 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 imported from China, countermeasures imposed by China in response, U.S. export restrictions on sales of products to China and other government actions that restrict or otherwise adversely affect our ability to sell our products to customers in China may have a material adverse impact on our business, including our ability to sell products and to manufacture or source components. 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, Europe revenue is and Central America. Our 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 international Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 exchange rate in relation to foreign currencies, such as the Costa Rican Colon, Euro, Renminbi and Singapore Dollar. If the U.S. dollar weakens compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. Economic regulation in China could adversely impact our business and results of operations. We have a significant portion of our assembly and testing capacity in China. For many years, the Chinese economy has experienced periods of rapid growth and wide fluctuations in the rate of inflation. In response to these factors, the Chinese government has, from time to time, adopted measures to regulate growth and to contain inflation, including currency controls and measures designed to restrict credit, control prices or set currency exchange rates. Such actions in the future, as well as other changes in Chinese laws including actions in furtherance of and regulations, China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, the emergence of China-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. foster Changes in government trade policies, including the imposition of tariffs and export restrictions, have limited and could continue to limit our ability to sell or provide our products and other items to certain customers and suppliers, which may materially adversely affect our sales and results of operations. The U.S. or foreign governments have taken and may continue or regulatory action that could materially interfere with reexport, our ability to export, import and transfer items to certain countries, products and other particularly China. For example, the imposition of tariffs has resulted in higher duties owed on certain products that are imported from China to the United States. administrative, legislative take to Furthermore, we have experienced and may continue to experience restrictions on our ability to export, reexport, and transfer our products and other items to 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 companies and transferring products to certain of our customers, and imposed significant restrictions on the ability to obtain export licenses for our products. Such restrictions could have a continuing negative impact on our future revenue and results of operations. In addition, our customers or suppliers affected by U.S. government sanctions or threats of sanctions may respond by from exporting, reexporting, 19 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 developing their own solutions to replace our products or by adopting our foreign competitors’ solutions and products. Importantly, governments like China have the ability to impose countermeasures in reaction to increasing U.S. government sanctions and restrictions imposed on their companies which may impact our operations and future revenue as the compliance landscape becomes more challenging. We cannot predict what further actions may ultimately be taken with respect to tariffs, export restrictions or other 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 of customers restrictions on our ability to sell or transfer products to such customers or suppliers as a result of tariffs, export regulatory actions could materially adversely affect our sales, business and results of operations. restrictions or other U.S. imposition suppliers the or or 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 generate cash in the future and on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot be sure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay our debt. 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 and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our debt. These alternative measures may not be successful and may not permit us to meet our scheduled debt service and other obligations. Additionally, 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 use of 20 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 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, trade secret laws, confidentiality procedures and licensing arrangements to protect our IP 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 IP 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 IP rights, we may not be able to prevent misappropriation of our technology. Additionally, our competitors may be able to independently develop non-infringing technologies that are substantially equivalent or superior to ours. We may need to engage in legal actions to enforce or defend our IP rights. Generally, IP litigation is both expensive and unpredictable. Our involvement in IP 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 IP rights. Such assertions could lead to expensive and unpredictable litigation, diverting the attention of management and in any technical personnel. An unsuccessful result 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 IP 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. We rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities to provide us with competitive advantages. We protect into confidentiality this agreements with consultants, strategic partners and other third parties. We also design our computer systems and networks and implement various procedures to restrict unauthorized access to dissemination of our proprietary information. information by entering employees, our We face internal and external data security threats. Current, departing or former employees or third parties to improperly use or access our could attempt computer systems and networks to copy, obtain or Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 misappropriate otherwise interrupt our business. proprietary our information or causes, We are also subject to significant system or network including disruptions from numerous computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. Geopolitical tensions or conflicts, such as the ongoing war between Russia and Ukraine and the tensions between China and Taiwan, may create a heightened risk of cybersecurity incidents. Security breaches, computer malware, phishing, spoofing, and other cyber-attacks have become more prevalent and sophisticated in recent years. While we defend against these threats on a daily basis, we do not believe that such attacks to date have caused us any material damage. Because the techniques used by computer hackers and others to access or sabotage networks constantly evolve and generally are not recognized until launched against a target, we may be unable to anticipate, counter or ameliorate all of these techniques or identify all security vulnerabilities. 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, in a loss of customer confidence in the result threat mitigation and detection adequacy of our cause us to incur processes and procedures, significant costs to remedy the damages caused by the incident, and divert management and other resources. We routinely implement improvements to our network security safeguards and we are devoting increasing resources to the security of our IT 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. and including without encryption Furthermore, we rely on products and services provided by third-party suppliers, which may include open-source code, to operate certain critical business limitation, cloud-based systems, authentication infrastructure, technology, employee email, and other functions, which exposes us to supply chain attacks or other business disruptions. We cannot guarantee that third parties and infrastructure in our supply chain or 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 IT systems, including our products and services, or the third-party IT systems that support our services. Our vulnerabilities and ability monitor security practices is limited, and these third parties 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. to identify all security third-parties’ information these 21 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 IT 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 delete such data about themselves. Failure to meet GDPR requirements could result in penalties of up to 4% of worldwide revenue. China has also implemented laws and regulations requiring companies’ IT security to meet certain standards and may environment require the 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 certifications. addition, unique In 22 in significant penalties or orders to stop the alleged inadvertent non-compliant activity. Finally, even our 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 price of our common stock offered by a bidder in a takeover context and may also make it more difficult for a third party to replace directors on our board of directors. Further, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future. 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 be and volatile subject continue to to wide In addition, the trading volume of our fluctuations. 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 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, social media or press; ‰ 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. In addition, can experience considerable price and volume fluctuations that are unrelated to our performance. the stock market in general Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 23 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 ITEM 2. PROPERTIES. Our corporate and CSG headquarters (leased) and our ACG headquarters (owned) are in Greensboro, North Carolina. Our HPA headquarters (owned) is in Richardson, Texas. The following table sets forth our primary production facilities as of April 1, 2023: 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 idled a BAW manufacturing facility (owned) in Farmers Branch, Texas, which was subsequently classified as held for sale in fiscal 2023. 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 12, 2023, there were 644 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 and the S&P 500 Semiconductors Index for the five years ended April 1, 2023. The graph and table assume an initial investment of $100 was made on March 31, 2018 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. 24 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 PERFORMANCE GRAPH COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Qorvo, Inc., the S&P 500 Index and the S&P 500 Semiconductors Index $300 $250 $200 $150 $100 $50 $0 3/31/18 3/30/19 3/28/20 4/3/21 4/2/22 4/1/23 Qorvo, Inc. S&P 500 S&P 500 Semiconductors Qorvo, Inc. S&P 500 S&P 500 Semiconductors March 31, 2018 March 30, 2019 March 28, 2020 April 3, 2021 April 2, 2022 April 1, 2023 $100.00 $100.00 $100.00 $101.82 $109.50 $104.83 $114.54 $101.86 $111.84 $273.81 $172.48 $144.17 $159.25 $184.17 $169.94 $197.39 $251.68 $244.15 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. 25 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Issuer Purchases of Equity Securities Period January 1, 2023 to January 28, 2023 January 29, 2023 to February 25, 2023 February 26, 2023 to April 1, 2023 Total Total number of shares purchased (in thousands) 149 212 1,126 1,487 Average price paid per share $ 97.42 104.43 100.68 $100.89 Total number of shares purchased as part of publicly announced plans or programs (in thousands) Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) 149 212 1,126 1,487 $1,840.5 1,818.4 1,705.0 $1,705.0 On November 2, 2022, we announced that our Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of our outstanding common stock, which included the remaining authorized dollar amount under a prior program terminated concurrent with the new authorization. Under the current 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. Refer to Note 16 of the Notes to Consolidated Financial Statements for further discussion of our share repurchase program. As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the IRA. The excise tax is recognized as part of the cost basis of shares acquired in the Consolidated Statement of Stockholders’ Equity and is excluded from amounts presented above. ITEM 6. [RESERVED] 26 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 three reportable operating segments: HPA, CSG and ACG. HPA is a leading global supplier of RF and power solutions for automotive, defense and aerospace, cellular infrastructure, broadband and other markets. CSG is a leading global supplier of connectivity and sensor solutions, with broad expertise spanning UWB, Matter®, Bluetooth® Low Energy, Zigbee®, Thread®, Wi-Fi®, cellular IoT, and MEMS-/BAW-based sensors. ACG is a leading global supplier of cellular RF solutions laptops, for tablets and other devices. smartphones, wearables, in and due China EMEA chain, supply industry demand, customer The COVID-19 pandemic has continued to impact the semiconductor causing uncertainty worldwide economies and financial markets. During fiscal 2023, we experienced unexpectedly weakened demand for to 5G handsets in in part, unprecedented disruption resulting, from measures taken in China to control the COVID-19 pandemic and the war in Ukraine. As a result, we did not meet the minimum purchase commitments under a long-term capacity reservation agreement with a foundry supplier. In fiscal 2023, the purchase shortfall resulted in an impairment to the prepaid refundable deposit of $130.0 million, and we recorded additional reserves of approximately $20.0 million for inventory in excess of demand forecasts. Additionally, we assessed the future minimum purchase commitments the agreement and over recorded of $31.0 million. These transactions resulted in a total increase to cost of goods sold of $181.0 million in fiscal 2023. the remaining term of estimated shortfall liability an As part of our ongoing efforts to focus on growth drivers and key markets and to streamline operations, in the fourth quarter of fiscal 2023, we began to seek Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 to to our further further related develop to invest necessary alternatives strategic non-core biotechnology business. Given the future funding requirements its diagnostic testing solutions and achieve our desired results, we decided not in this business. Therefore, we determined that there was a more-likely-than-not expectation of selling or disposing of all, or a portion, of this reporting unit. An evaluation of the asset group within this reporting unit was performed which resulted in total restructuring charges These charges of approximately $94.0 million. included impairment of equipment and inventory of approximately $74.8 million, of approximately $6.8 million, and a goodwill impairment charge of approximately $12.4 million. charges other Fiscal 2023 Financial Highlights ‰ Revenue decreased 23.2% in fiscal 2023 to $3,569.4 million, compared to $4,645.7 million in global fiscal 2022, primarily due to ongoing macroeconomic (including measures challenges taken in China to control the COVID-19 pandemic, the war in Ukraine and the negative impact of higher inflation) which resulted in lower demand for 5G handsets and other products, such as Wi-Fi components, power management and base station. Demand was also negatively impacted by ongoing efforts to consume channel inventories. ‰ Gross margin for fiscal 2023 was 36.3%, compared to 49.2% in fiscal 2022, primarily due to charges associated with a long-term capacity reservation agreement and factory underutilization resulting from lower production levels. ‰ Operating income was $183.2 million in fiscal 2023, compared to $1,226.1 million in fiscal 2022. This decrease was primarily due to lower revenue and lower gross margin, as well as higher operating expenses. Operating expenses increased primarily due to restructuring charges and headcount-related expenses (including stock-based compensation), partially incentive-based compensation. ‰ Net income per diluted share was $1.00 for fiscal 2023, compared to net income per diluted share of $9.26 for fiscal 2022. ‰ Cash flows from operations was $843.2 million for fiscal 2023, compared to $1,049.2 million for fiscal 2022. This year-over-year decrease was primarily due to decreased profitability and changes in working capital. ‰ Capital expenditures were $159.0 million in fiscal 2023, compared to $213.5 million in fiscal 2022. ‰ We repurchased approximately 8.7 million shares of our common stock for approximately $862.2 million. offset lower by 27 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 RESULTS OF OPERATIONS Consolidated The table below presents a summary of our results of operations for fiscal years 2023 and 2022 along with a year- over-year comparison. Refer to 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 2, 2022, filed with the SEC on May 20, 2022, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended April 3, 2021 along with a year-over-year comparison between fiscal years 2022 and 2021. Fiscal 2023 Fiscal 2022 Increase (Decrease) Dollars % of Revenue Dollars % of Revenue Dollars Percentage Change (In thousands, except percentages) Revenue Cost of goods sold Gross profit Research and development Selling, general and administrative Other operating expense $3,569,399 2,272,457 100.0% $4,645,714 2,359,546 63.7 100.0% $(1,076,315) (87,089) 50.8 (23.2)% (3.7) 1,296,942 649,841 358,790 105,143 36.3 18.2 10.1 2.9 2,286,168 623,636 349,718 86,745 49.2 13.4 7.5 1.9 (989,226) 26,205 9,072 18,398 (43.3) 4.2 2.6 21.2 Operating income $ 183,168 5.1% $1,226,069 26.4% $(1,042,901) (85.1)% REVENUE GROSS MARGIN Gross margin decreased primarily due to charges associated with a long-term capacity reservation agreement, factory underutilization resulting from lower production levels, inventory charges related to issues. demand fluctuations and supplier quality These decreases to gross margin were partially offset by favorable changes in product mix. OPERATING EXPENSES expenses, Research and Development R&D spending increased primarily due to headcount- related stock-based compensation, as a result of our increased investment in developing new technologies and products. These increases were partially offset by lower incentive- based compensation. including Selling, General and Administrative Selling, general and administrative expense increased primarily due to headcount-related expenses, including stock-based compensation. These increases were partially offset by lower incentive-based compensation. Other Operating Expense Other operating expense increased primarily due to restructuring related charges associated with our non-core biotechnology business. Refer to Note 12 of the Notes to Consolidated Financial Statements for additional information. Revenue decreased primarily due to ongoing global macroeconomic challenges (including measures taken in China to control the COVID-19 pandemic, the war in Ukraine and the negative impact of higher inflation) which resulted in lower demand for 5G handsets and other products, such as Wi-Fi components, power management and base station. Demand was also negatively impacted by ongoing efforts to consume inventories. The decreased revenue was channel partially offset by higher demand for our defense products and incremental revenue from SiC-based power products resulting from the acquisition of United Silicon Carbide, Inc. (“United SiC”). sales to multiple largest end customer We provide products to our (Apple) contract through manufacturers, which in the aggregate accounted for approximately 37% and 33% of total revenue in fiscal respectively. Samsung years 2023 and 2022, accounted for approximately 12% and 11% of total revenue in fiscal years 2023 and 2022, respectively. These customers primarily purchase RF solutions for a variety of mobile devices. International shipments amounted to $1,751.4 million in fiscal 2023 (approximately 49% of revenue) compared to $2,717.3 million in fiscal 2022 (approximately 58% of revenue). Shipments to Asia totaled $1,549.0 million in fiscal 2023 (approximately 43% of revenue) compared to $2,465.7 million in fiscal 2022 (approximately 53% of revenue). 28 Operating Segments High Performance Analog (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Fiscal Year Increase (Decrease) 2023 2022 Dollars Percentage Change $727,187 $707,395 210,441 198,820 $ 19,792 (11,621) 2.8% (5.5) 27.3% 29.7% HPA revenue increased primarily due to higher demand for our defense products and incremental revenue from our SiC-based power products resulting from the acquisition of United SiC. These increases were partially offset by a decrease in demand for power management products supporting solid-state drives and power tools and base station products, driven by ongoing efforts to consume channel inventories. HPA operating income decreased primarily due to effects from factory underutilization. Operating expenses increased primarily as a result of the addition of United SiC expenses, partially offset by lower incentive-based compensation. Connectivity and Sensors Group (In thousands, except percentages) Revenue Operating (loss) income Operating (loss) income as a % of revenue Fiscal Year Decrease 2023 2022 Dollars Percentage Change $474,364 $703,881 $(229,517) (179,894) 107,814 (72,080) (32.6)% (166.9) (15.2)% 15.3% CSG revenue decreased primarily due to a decrease in end market demand for Wi-Fi components, in addition to ongoing efforts to consume channel inventories. CSG operating income decreased primarily due to lower revenue, factory underutilization and higher inventory charges. Operating expenses increased primarily due to headcount-related expenses as a result of our increased investment in developing new technologies and products. Advanced Cellular Group (In thousands, except percentages) Revenue Operating income Operating income as a % of revenue Fiscal Year Decrease 2023 2022 Dollars Percentage Change $2,367,848 $3,234,438 $(866,590) (605,680) 1,233,388 627,708 (26.8)% (49.1) 26.5% 38.1% ACG revenue decreased primarily due to ongoing global macroeconomic challenges (including measures taken in China to control the COVID-19 pandemic, the war in Ukraine and the negative impact of higher inflation) which resulted in lower demand for 5G handsets. Demand for ACG products was also negatively impacted by ongoing efforts to consume channel inventories. ACG operating income decreased primarily due to lower revenue, factory underutilization resulting from lower production levels, as well as inventory charges related to demand fluctuations and supplier quality issues. Operating expenses increased primarily due to headcount-related expenses as a result of increased investment in developing new technologies and products. These decreases to operating income were partially offset by favorable changes in product mix. Refer to Note 17 of the Notes to Consolidated Financial Statements for a reconciliation of segment operating income to the consolidated operating income for fiscal years 2023, 2022 and 2021. 29 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 INTEREST, OTHER INCOME AND INCOME TAXES (In thousands) Interest expense Other income, net Income tax expense Fiscal Year 2023 2022 $(68,463) $ (63,326) 18,341 (147,731) 9,924 (21,477) Interest expense During fiscal 2023, we recorded interest expense primarily related to the 4.375% senior notes due 2029 (the “2029 Notes”), the 3.375% senior notes due 2031 (the “2031 Notes”), and the 1.750% senior notes due 2024 (the “2024 Notes”). During fiscal 2022, we recorded interest expense primarily related to the 2029 Notes and the 2031 Notes. Interest expense in the preceding table for fiscal years 2023 and 2022 is net of capitalized interest of $3.9 million and $3.7 million, respectively. Other income, net During fiscal 2023, we recorded interest income of $21.1 million, losses of $4.2 million based on our share of the earnings from our limited partnership investments, of impairments and $7.8 million from other investments. losses and recorded fiscal 2022, we During of $12.0 million based on our share of the earnings from limited partnership investments, net gains of our $2.7 million from other investments, and interest income of $2.7 million. income Income tax expense Income tax expense for fiscal 2023 was $21.5 million, which was primarily comprised of tax expense related to international operations generating pre-tax book the Tax Act’s GILTI income and the impact of provisions (including the effects of the capitalization and amortization of research and development expenses which were previously expensed for U.S. tax purposes), offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits. This resulted in an annual effective tax rate of 17.2% for fiscal 2023. for tax fiscal 2022 expense was Income $147.7 million, which 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. This resulted in an annual effective tax rate of 12.5% for fiscal 2022. 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 30 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 2023 and 2022, the valuation allowance against domestic and foreign deferred tax assets was $35.9 million and $36.3 million, respectively. Refer to Note 13 of Financial Statements regarding income taxes. the Notes to Consolidated information for additional 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 1, 2023, compensation cost related to unvested restricted stock units was $137.6 million, which will be amortized over the weighted-average remaining service period of approximately 1.3 years. Refer to Note 15 of Financial Statements regarding stock-based compensation. the Notes to Consolidated information for additional LIQUIDITY AND CAPITAL RESOURCES Cash generated by operations is our primary source of liquidity. As of April 1, 2023, we had working capital of approximately including $808.8 million in cash and cash equivalents, compared approximately $1,774.7 million, including $972.6 million in cash and cash equivalents, as of April 2, 2022. to working $1,474.0 million, capital of Our $808.8 million of total cash and cash equivalents as of April 1, 2023, includes $554.7 million held by our foreign subsidiaries, of which $365.6 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 agreement restated, modified or otherwise supplemented from time to time, the “Credit Agreement”) with Bank of America, N.A., acting as administrative agent, and a syndicate of lenders. The Credit Agreement amended and restated the previous (as amended, (the “Revolving credit agreement dated as of December 5, 2017. The Credit Agreement includes a senior revolving line of credit to $300.0 million, and included a senior term loan, that was fully repaid in fiscal 2022. The Revolving Facility capital is available to finance working capital, expenditures and other general corporate purposes. Facility”) up of Pursuant to the Credit Agreement, we 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. During fiscal years 2023 and 2022, there were no borrowings under the Revolving Facility. The Credit Agreement contains various 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 1, 2023, we were in compliance with these covenants. Refer to Note 9 of the Notes to Consolidated Financial Statements for further the Credit Agreement, information about including applicable interest rates. the Stock Repurchases On November 2, 2022, we announced that our Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of our outstanding common stock, which included the remaining authorized dollar amount under a prior program terminated new concurrent with the current program, share authorization. Under 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, 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. requirements, regulatory 8.7 million During fiscal years 2023, 2022 and 2021, we shares, repurchased approximately 7.3 million shares and 3.6 million shares of our common stock for approximately $862.2 million, $1,152.3 million and $515.1 million, respectively (including transaction costs and excise tax, as share applicable) under repurchase 2023, As approximately $1,705.0 million remains available for the current share repurchase repurchases under the Notes to program. Refer Consolidated further for discussion of our share repurchase program. the prior and current 1, of to Note 16 of Statements programs. Financial April Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Cash Flows from Operating Activities Operating activities in fiscal 2023 generated cash of $843.2 million, compared to $1,049.2 million in fiscal 2022. This decrease in cash provided by operating activities was primarily due to decreased profitability, partially offset by changes in working capital. In fiscal 2022, cash provided by operating activities was impacted by an increase in prepaid expenses primarily due to prepayments of certain fees and deposits associated with a long-term capacity reservation agreement. Cash Flows from Investing Activities Net cash used in investing activities in fiscal 2023 was $153.4 million, compared to $596.0 million in fiscal 2022. We did not acquire any businesses in fiscal 2023, while in fiscal 2022 we completed the acquisitions of NextInput, Inc. and United SiC which resulted in net cash outflows of $389.1 million. In addition, our cash outflows for capital expenditures decreased in fiscal 2023. Cash Flows from Financing Activities Net cash used in financing activities in fiscal 2023 was $853.4 million, compared to $875.5 million in fiscal 2022. We did not record any significant debt activity in fiscal 2023, while in fiscal 2022 we received proceeds of $499.1 million from the issuance of the 2024 Notes and repaid a term loan balance of $197.5 million. In addition, less cash was used for stock repurchases in fiscal 2023. Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including market acceptance of and demand for our products, acquisition opportunities, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flows from operations, coupled with our existing cash and cash equivalents and availability from our Revolving Facility and term loans, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, there is a significant if decrease in demand for our products, or if our revenue grows faster than we anticipate, operating cash flows If existing may be insufficient to meet our needs. resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. Additional 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. 31 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 CONTRACTUAL OBLIGATIONS The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 1, 2023, 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 2024 2025-2026 2027-2028 $ 79,987 $ 63,003 $ 16,984 $ — $ 1,203,691 102,162 2,516,813 594,114 22,408 57,750 567,094 33,258 630,375 42,483 24,091 133,438 2029 and thereafter — — 22,405 1,695,250 Total $3,902,653 $737,275 $1,247,711 $200,012 $1,717,655 (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 1, 2023. (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 1, 2023. Refer to 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 1, 2023. Debt obligations are classified based on their stated maturity date, and any future redemptions would impact our cash payments. Refer to Note 9 of the Notes to Consolidated Financial Statements for further information. Other Contractual Obligations As of April 1, 2023, in addition to the amounts shown in the contractual obligations table above, we have $21.0 million of unrecognized income tax benefits and accrued interest and penalties which have 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 $4.8 million is to be paid over the next three 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 $9.4 million as of April 1, 2023. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the amount and timing of any future cash outflows. Pension approximately $0.3 million in fiscal 2023 and are expected to be approximately $0.4 million in fiscal 2024. payments were benefit an obligation We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a 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 1, 2023 under plan the for was $40.7 million, of which $1.6 million is estimated to be paid in fiscal 2024. Refer to Note 10 of the Notes to Consolidated Financial Statements for further information. 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. 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. 32 Summarized Balance Sheets (in thousands) ASSETS Current assets (1) Non-current assets LIABILITIES Current liabilities Long-term liabilities (2) April 1, 2023 April 2, 2022 $ 972,989 $ 771,528 2,624,454 2,398,287 $ 296,049 $ 241,674 2,634,501 2,689,824 (1) Includes net amounts due from Non-Guarantor subsidiaries of $379.5 million and $286.8 million as of April 1, 2023 and April 2, 2022, respectively. (2) Includes net amounts due to Non-Guarantor subsidiaries of $509.1 million and $433.5 million as of April 1, 2023 and April 2, 2022, respectively. Summarized Statement of Income (in thousands) Revenue Gross profit Net loss Fiscal 2023 $ 889,727 (54,576) (372,643) CRITICAL ACCOUNTING 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 significant judgment and estimates on the part of management. Our critical accounting policies are reviewed periodically with the Audit Committee of the Board of Directors. We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. Refer to the Notes to Consolidated Financial Note 1 of Statements. Inventory Reserves. The valuation of inventory requires us to estimate obsolete or excess inventory. The determination of obsolete or excess inventory requires us to estimate the future demand for our products within specific time horizons, generally 12 to 24 months. The estimates of future demand that we inventory reserves are the use in the valuation of same as those used in our revenue forecasts and are also consistent with the estimates used in 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. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 These valuations and estimates require significant judgment. If actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations. Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted. Refer to Note 3 of the Notes to Consolidated Financial Statements for additional information regarding our inventories. to recover Property and Equipment. Periodically, we evaluate the the period over which we expect economic value of our property and equipment, considering factors such as changes in machinery and equipment technology, our ability to re-use equipment technology and across historical usage trends. When we determine that the lives of assets are shorter or longer than we useful had originally estimated, we adjust the rate of depreciation to reflect the revised useful lives of the assets. generations of process 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 results are not and industry consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations. If actual trends. Refer to Note 4 of the Notes to Consolidated Financial Statements for additional information regarding our property and equipment. 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 the identifiable assets and liabilities is values of is assigned to the recorded to goodwill. Goodwill 33 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 reporting unit that is expected to benefit from the synergies of the business combination. A number of significant assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with to the intangible assets acquired. The respect valuation of intangible assets requires the use of valuation techniques such as the income approach. The 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. approach income 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 legal claims, deferred revenue and liabilities or contingent consideration, each as may be applicable. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recorded to the income statement. Refer to Note 5 of the Notes to Consolidated Financial Statements for additional information regarding our business acquisitions. level on the first day of our Goodwill Impairment Testing. Goodwill is not amortized, but rather is reviewed for impairment at the reporting unit fourth quarter of each fiscal year, or when there is evidence that events or changes in circumstances indicate the carrying amount of the goodwill may not be recovered. Under ASC 350, “Intangibles—Goodwill and Other,” we have the option to first assess qualitatively whether it is more likely than not the fair value of a reporting unit is less than its carrying amount, including goodwill. If qualitative assessments conclude it is more likely than not the fair value of any reporting unit is less than its carrying value, quantitative assessments are performed on the applicable value reporting and determinations estimates, future revenue, profitability and cash flows, our operational plans and our interpretation of current economic indicators and market valuations. the in judgments significant including assumptions about our Inherent units. are fair During the second quarter of fiscal 2023, we updated our organizational structure to more closely align similar technologies and applications with customers 34 to Prior structure. to and end markets (the “Reorganization”). Refer the Notes to Consolidated Financial Note 17 of information regarding our Statements for additional new the organizational Reorganization (“Pre-Reorganization”), we operated under two segments with a total of five reporting units (“Post- and three Reorganization”) we are operating under segments with a total of eight In accordance with ASC 350, we performed quantitative impairment assessments on each reporting unit immediately in organizational structure. the Reorganization reporting units. subsequent change before after and the to Our quantitative assessments considered the income approach and the market approach to estimate each reporting unit’s fair value. Under the income approach, the fair value of each reporting unit is based on the present value of estimated future cash flows. Cash flow projections are based on our estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used to determine the present value of future cash flows is based on the weighted-average risk cost of associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating The resulting fair value, based on the income and market approaches, is then compared to the carrying value to determine if impairment is necessary. capital adjusted for characteristics. the relevant investment and on for our the opted to for goodwill Pre-Reorganization perform a the goodwill Based quantitative assessment performed on July 2, 2022, management concluded there was no goodwill impairment. Based on the Post-Reorganization quantitative analysis performed on July 3, 2022 (the “Quantitative Analysis”), it was determined the fair value of five of our eight reporting carrying values. units significantly exceeded their Therefore, impairment annual assessment that was performed as of January 1, 2023, qualitative we impairment assessment related to these five reporting units. We concluded based on the relevant facts and circumstances, including the Quantitative Analysis performed, it was more likely than not that the fair value of each of these reporting units exceeded their related carrying value and no further impairment testing was required. In addition, based on the Quantitative Analysis, it was determined the fair value of three of our eight reporting units did not significantly exceed their carrying values. Therefore, we performed additional quantitative analyses on two of these reporting units as part of our qualitative analysis and concluded that based on the relevant facts and circumstances, it was more likely than not that the fair value of each of these reporting units exceeded their related carrying value and no further impairment testing was required. to invest As part of our ongoing efforts to focus on growth drivers and key markets and to streamline operations, in the fourth quarter of fiscal 2023, we began to seek strategic alternatives for the third reporting unit (our non-core biotechnology business). Given the future funding requirements necessary to further develop its diagnostic testing solutions and achieve our desired results, we decided not in this business. Therefore, we determined that there was a more-likely-than-not expectation of selling or disposing of all, or a portion, of this reporting unit. Based on these facts and circumstances, we determined that the carrying value exceeded the fair value of this reporting unit which resulted in a goodwill impairment charge of approximately $12.4 million (representing the entire goodwill assigned to this reporting unit), which is recorded in “Other operating expense” in the Consolidated Statement of Income for the fiscal year ended April 1, 2023. further that four of our five reporting units’ In fiscal 2022 (based on the Pre-Reorganization structure), we completed our annual qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely fair than not values values. However, for one of our reporting units a quantitative assessment was performed which resulted in a approximately goodwill $48.0 million, which is recorded in “Other operating expense” in the Consolidated Statement of Income. impairment exceeded carrying related charge their of Refer to Note 6 of the Notes to Consolidated Financial information regarding our Statements for additional goodwill and intangible assets. useful assets customer intangible (including relationships, Identified Intangible Assets. We amortize definite- developed lived technology technology, their licenses, backlog and trade names) over estimated of lives. in-process research and development development, (“IPRD”) developed technology and are amortized over their useful lives. The asset balances relating to abandoned projects are impaired and expensed to research and development (“R&D”). transferred completion assets Upon are to to facts determine whether We evaluate definite-lived intangible assets for impairment and circumstances indicate that the carrying amount of the assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group 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. When measuring impairment, we make significant assumptions and apply judgment in estimating future cash flows and their Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 fair values, including annual asset revenue growth rates and a terminal year growth rate that reflects the inherent risk in future cash flows. If actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations. No definite-lived intangible asset impairment charges were recorded in fiscal years 2023 or 2022. Refer to Note 6 of the Notes to Consolidated Financial Statements for additional information regarding our identified intangible assets. Purchase Obligations. We evaluate material purchase obligations each reporting period to assess whether our contractual commitments exceed our current and long-term forecast. These evaluations include consideration of customer legal factors obligations, macroeconomic and geopolitical as well as market and industry trends. forecasts, In fiscal 2022, we entered into a long-term capacity reservation agreement with a foundry supplier (which was later amended in fiscal 2023) that requires us to purchase, and the foundry supplier to supply, a certain number of wafers through calendar year 2026. In connection with this agreement, we paid an upfront refundable deposit, and if the purchase commitments the agreement were not met, under certain per circumstances the supplier could deduct the amount of purchase shortfall amounts from the prepaid refundable deposit at the end of each calendar year. We experienced unexpectedly weakened demand in fiscal 2023 and did not meet the minimum purchase commitments under the amended long-term capacity reservation agreement, which resulted in impairments to the prepaid refundable deposit, additional inventory reserves for inventory in excess of demand forecasts, and a liability for the estimated purchase commitment shortfall over the remaining term of the agreement. To the extent that our assumptions pertaining to anticipated future demand are incorrect or there are further declines in customer forecasts, additional charges may be recorded in future periods, which would have a negative impact on our gross margin and other operating results. Refer to Note 11 of Financial Statements regarding our purchase obligations. the Notes to Consolidated information for additional Revenue Recognition. Revenue is recognized when the promised goods or services is control of transferred to our customers, 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. in an amount We apply a five-step approach in determining the revenue to be recognized: amount and timing of 35 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 a the contract with (3) determining identifying customer; (1) identifying the performance obligations in the (2) contract; 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. Our revenue recognition accounting methodology contains uncertainties because it requires us to make significant estimates and assumptions, and to apply judgment. For example, for arrangements that have multiple performance obligations, we must exercise judgment and use estimates in order to (1) determine whether performance obligations are distinct and should be accounted for separately; (2) determine the stand-alone performance obligation; (3) allocate the transaction price among the various performance obligations on a relative standalone selling price basis; and (4) determine whether revenue for each performance obligation should be recognized at a point in time or over time. selling price each of If we were to change any of estimates, decrease in the amount of revenue that we report in a particular period. it could cause a material these judgments or increase or revenue or deferred Refer to Note 1 of the Notes to Consolidated Financial Statements for a complete discussion of our revenue recognition policies. Income Taxes. In determining income for 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. Refer result 36 to Note 13 of the Notes to Consolidated Financial regarding Statements changes in the valuation allowance and net deferred tax assets. information additional for tax As part of our financial process, we also assess the reporting positions will likelihood that our ultimately be sustained. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion, or all, of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which will in a corresponding increase or decrease in net income in the period when such determinations are made. result tax the Notes to Consolidated to Note 13 of Refer Financial Statements information for regarding our uncertain tax positions and the amount of unrecognized tax benefits. additional ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management The primary objective of our financial risk management impact activities is to reduce the negative financial resulting from changes in interest foreign rates, currency exchange rates, equity prices and commodity prices (the “Underlying Exposures”). We manage these Underlying Exposures through operational means as 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 our risk management activities will be successful in mitigating the financial impact resulting from movements in the Underlying Exposures. through the use of financial various Interest Rate Risk We may be exposed to interest rate risk via the terms of our Revolving Facility and term loans. the Revolving Facility were to be drawn or a term loan were to be requested, it would bear interest at a variable rate. Refer to Note 9 of the Notes to Consolidated Financial Statements for information. As of April 1, 2023, we did not have any outstanding borrowings under the Revolving Facility. further If 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 based instances, are, operations in foreign currencies and denominated in the local therefore are affected by changes in the U.S. dollar exchange rate in relation to foreign currencies, such as the Costa Rican Colon, Euro, Renminbi, and Singapore Dollar. If the U.S. dollar weakens compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. We seek to manage our foreign currency exchange risk in part through operational means. some For fiscal 2023, we incurred a foreign currency loss of $0.6 million as compared to a loss of $1.5 million in fiscal 2022, which is recorded in “Other income (expense), net.” financial instrument holdings, Our including foreign receivables, cash and payables at April 1, 2023, 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 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 $2.5 million in fiscal 2023. If the U.S. dollar increased in value 10% in currency re-measured relation instruments, our net income would have increased by approximately $2.0 million in fiscal 2023. 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 1, 2023, our marketable equity investments were immaterial. Refer to 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 37 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 39 40 41 42 43 44 69 38 CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ASSETS Current assets: Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 April 1, 2023 April 2, 2022 Cash and cash equivalents Accounts receivable, net of allowance of $369 and $402 as of April 1, 2023 and $ 808,757 $ 972,592 April 2, 2022, 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: 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; 98,649 and 106,303 shares issued and outstanding at April 1, 2023 and April 2, 2022, respectively Accumulated other comprehensive (loss) income Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity 304,519 796,596 46,684 26,535 46,703 2,029,794 1,149,806 2,760,813 537,703 20,406 193,381 568,850 755,748 49,839 32,151 70,685 2,449,865 1,253,591 2,775,634 674,786 31,086 324,110 $6,691,903 $7,509,072 $ 210,701 $ 327,915 240,186 107,026 222,463 122,599 555,763 2,048,073 185,273 675,127 2,047,098 233,629 2,789,109 2,955,854 — — 3,821,474 (3,175) 84,495 4,035,849 5,232 512,137 3,902,794 4,553,218 $6,691,903 $7,509,072 See accompanying notes. 39 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Revenue Cost of goods sold Gross profit Operating expenses: Research and development Selling, general and administrative Other operating expense Total operating expenses Operating income Interest expense Other 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 2023 Fiscal Year 2022 2021 $3,569,399 $4,645,714 $4,015,307 2,272,457 2,359,546 2,131,741 1,296,942 2,286,168 1,883,566 649,841 358,790 105,143 623,636 349,718 86,745 570,395 367,238 39,306 1,113,774 1,060,099 976,939 183,168 1,226,069 906,627 (68,463) (63,326) 9,924 18,341 (75,198) (24,049) 124,629 1,181,084 807,380 (21,477) (147,731) (73,769) $ 103,152 $1,033,353 $ 733,611 $ $ 1.01 $ 9.38 $ 1.00 $ 9.26 $ 6.43 6.32 102,206 110,196 114,034 103,019 111,546 116,016 See accompanying notes. 40 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 (In thousands) Net income Other comprehensive (loss) income, net of tax: Change in pension liability 2023 Fiscal Year 2022 2021 $103,152 $1,033,353 $733,611 1,836 857 (597) Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term investment nature (10,254) (25,033) 27,859 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 (25) 36 (359) 118 16 83 (8,407) (24,417) 27,361 $ 94,745 $1,008,936 $760,972 See accompanying notes. 41 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Balance, March 28, 2020 114,625 $4,290,377 $ 2,288 $ — $ 4,292,665 Common Stock Shares Amount Accumulated Other Comprehensive (Loss) Income Retained Earnings Total — 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 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 — — — — 665 (20,847) 345 30,169 transaction costs and excise tax (8,664) (331,406) Stock-based compensation — 107,709 — 103,152 103,152 (8,407) — — — — — — — (8,407) (20,847) 30,169 (530,794) (862,200) — 107,709 Balance, April 1, 2023 98,649 $3,821,474 $ (3,175) $ 84,495 $ 3,902,794 See accompanying notes. 42 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 Asset impairments 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 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 Fiscal Year 2023 2022 2021 $ 103,152 $ 1,033,353 $ 733,611 206,423 132,425 — (66,145) 227,101 12,411 105,580 25,299 264,781 (81,450) 43,240 (115,495) (17,613) (33,240) 36,762 843,231 (158,953) (95) 5,639 (153,409) 210,949 150,466 744 31,875 — 48,000 83,507 14,150 (107,896) (236,196) (176,742) 33,950 (11,815) (3,139) (21,963) 1,049,243 203,206 252,898 61,991 (18,136) 5,281 — 89,322 (4,657) (91,275) 9,390 (18,490) 34,201 30,671 34,618 (20,778) 1,301,853 (213,466) (389,136) 6,646 (595,956) (186,960) (47,069) 15,371 (218,658) — — (861,751) 32,507 (197,500) 499,070 (1,152,287) 38,303 (1,087,994) 1,206,750 (515,084) 42,598 (23,415) (694) (53,382) (9,714) (38,658) (9,535) (853,353) (875,510) (401,923) (331) (3,281) 1,425 (163,862) (425,504) 682,697 972,805 1,398,309 715,612 Cash, cash equivalents and restricted cash at the end of the period $ 808,943 $ 972,805 $ 1,398,309 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents Restricted cash included in “Other current assets” and “Other non-current assets” $ 808,757 $ 972,592 $ 1,397,880 186 213 429 Total cash, cash equivalents and restricted cash $ 808,943 $ 972,805 $ 1,398,309 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 $ 66,115 $ $ 105,788 $ $ 33,107 $ 59,393 $ 125,322 $ 36,069 $ 81,232 53,236 56,469 See accompanying notes. 43 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Qorvo, Inc. and Subsidiaries Notes to Consolidated Financial Statements April 1, 2023 1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES Qorvo, Inc. (“the Company”) is a global leader in the development and commercialization of technologies and products for wireless, wired and power markets. Qorvo, Inc. was formed as the result of a business combination (the “Business Combination”) of RF Micro Devices, Inc. (“TriQuint”), which closed on January 1, 2015. Inc. and TriQuint Semiconductor, 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, and its primary assembly and test facilities are in China, Costa Rica, Germany and Texas. The Company also sources products and materials through external suppliers. The Company other design, manufacturing facilities throughout Asia, Europe and North America. operates sales and to and Prior segments fiscal 2023, During the second quarter of the Company updated its organizational structure to more closely align technologies and applications with customers this end markets. organizational change, the Company operated under two and Infrastructure and Defense Products (“IDP”)), and the to subsequent Company is operating under three segments (High Performance Analog (“HPA”), Connectivity and Sensors Group (“CSG”) and Advanced Cellular Group (“ACG”)). Refer to Note 17 for additional information regarding the new organizational structure. organizational Products change, (Mobile (“MP”) this 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 prior period amounts (including prior period segment results) have been reclassified to conform to the fiscal 2023 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 1, 2023, April 2, 2022 and April 3, 2021. Fiscal years 2023 and 2022 were 52-week years, and fiscal 2021 was a 53-week year. Use of Estimates The financial the preparation statements in conformity with U.S. generally accepted accounting principles requires management to make consolidated of 44 inventories, 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 tax warranty obligations, valuation of 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 consideration of the COVID-19 pandemic and other macroeconomic factors. Actual results could differ materially from these estimates, and such differences could affect the operations reported in future periods. the impact of 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 of publicly traded equity securities 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. 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 Notes to Consolidated Financial Statements 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. its The valuation Company technique. 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 paid to transfer a liability in an orderly transaction the measurement between market participants at date. financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the three-level respective hierarchy for fair value measurement is described as follows: ‰ Level 1—includes instruments for which inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. categorizes ‰ Level 2—includes instruments for which the inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly, and fair value can be determined through the use of models or other valuation methodologies that do not require significant judgment since the inputs are corroborated by readily observable data. The ‰ Level 3—includes are based instruments the valuations are unobservable and significant to the overall fair value measurement. These inputs are supported by little the use of or no market activity and reflect significant management judgment. for which that inputs on Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 sold” in the period incurred rather than as a portion of inventory cost. The Company’s business is subject to the risk of technological and design changes. The Company evaluates inventory levels quarterly against demand forecasts on a material or product family basis to evaluate its overall risk. Reserves are inventory adjusted to reflect inventory values in excess of demand forecasts and management’s analysis and assessment of overall inventory risk. In the event the Company sells inventory that had been covered by a specific inventory reserve, the sale is recorded at the actual selling price and the related cost of goods sold is recorded at the reserve. inventory cost, net of the full against defects in materials Product Warranty The Company generally sells products with a limited and warranty 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 historical experience as well as specifically identified claims. If there is a significant 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 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. In accordance with Accounting Standards Codification (“ASC”) 330, “Inventory” (“ASC 330”), abnormal manufacturing costs are charged to “Cost of goods Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, 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 45 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements the ability to re-use equipment across technology, generations of process technology and historical usage trends. If the Company determines that the lives of its assets are shorter or longer than useful the rate of depreciation is originally estimated, the adjusted to reflect 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 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. uses estimated Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company incremental its borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes 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 46 In addition, lease and non-lease components as a single lease component. the Company made an accounting policy election to exclude leases with an initial term of 12 months or less from the balance sheet. 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 the contingent 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 Statement of Income. Goodwill Impairment Testing In accordance with ASC 350, “Intangibles—Goodwill and Other” (“ASC 350”), goodwill is not amortized, but rather 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. Notes to Consolidated Financial Statements including goodwill. 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, 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. its The less than units. value, quantitative If qualitative assessments conclude that it is more likely than not that the fair value of any reporting unit is quantitative carrying assessments are performed on the applicable assessments reporting consider both the income and market approaches to estimate the fair value of a 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 revenue, 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. Refer to Note 6 for additional goodwill and intangible asset impairment testing. information regarding 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. IPRD assets represent the fair value of incomplete 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 lives. The asset balances relating to abandoned projects are impaired and expensed to R&D. their useful Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 factors such as changes in the and internal 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 Company assesses the recoverability of identified projected the by intangible 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 and occur in the period in which the impairment determination was made. comparing assets their 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 the Company’s goods or services. A majority of 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 less than 4% of overall revenue. The Company applies a five-step approach as defined from Contracts with in Customers,” in determining the amount and timing of revenue to be recognized: (1) identifying the contract identifying the performance with a customer; 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. ASC 606, “Revenue (2) 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, the Company’s standard terms and conditions apply. The Company 47 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements 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 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 reserves 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. There have been no material losses on accounts receivable for fiscal years 2023, 2022 or 2021. Contract assets and contract liabilities recorded on the Consolidated Balance Sheets were immaterial as of April 1, 2023 and April 2, 2022. impairment The Company invoices customers upon shipment and recognizes revenue in accordance with delivery terms. As of April 1, 2023, the Company had $167.8 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. 48 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 1, 2023, compensation cost remaining unearned related to unvested restricted total Notes to Consolidated Financial Statements stock units was $137.6 million, which will be amortized over the weighted-average remaining service period of approximately 1.3 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 for foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rates on the balance sheet dates. Revenue and expenses are translated using the weighted-average exchange rates throughout the shown separately as a component of “Accumulated other comprehensive (loss) 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 Supplemental Financial Information The “Accrued liabilities” balance as of April 1, 2023 and April 2, 2022, includes accrued compensation and benefits of $92.9 million and $113.6 million, respectively, and accrued rebates of $42.8 million and $33.1 million, respectively. The “Other current liabilities” balance as of April 1, 2023 includes income taxes payable of $63.6 million and contingent consideration related to the acquisition of United Silicon Carbide, (“United SiC”) of $31.3 million. The “Other current liabilities” balances as of April 2, 2022 includes income taxes payable of $87.8 million. Inc. 2021, Financial 2021-10, “Government Recent Accounting Pronouncements and Other Developments Accounting the In November Standards Board issued Accounting Standards Update Assistance (“ASU”) (Topic 832) – Disclosures by Business Entities about Government Assistance” to increase transparency about grants certain government assistance or received by a business entity. This new guidance requires the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The Company adopted ASU 2021-10 on April 3, 2022. Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 From time to time, the Company receives cash grants federal and state and tax abatements from U.S. governments and non-U.S. governments which, in most cases, attach conditions for a specific duration period and generally relate to hiring employees, the construction or acquisition of assets or to developing specific technologies. If conditions are not satisfied, or the duration period for the agreement is infringed, the incentives are subject to reduction, termination, or recapture. The Company’s accounting policy is to recognize a benefit to the income statement over the duration of the program when the conditions, including the required spending attached to the incentive are achieved and the Company is expected to complete any further requirements. A grant that compensates for operational expenses is recognized as a reduction from the nature of the expense the grant is designated related to property, plant and to offset. A grant equipment investments is recognized as a reduction to the cost-basis of the underlying assets with an ongoing reduction to depreciation expense based on the useful lives of the related assets. During fiscal the Company received a nominal amount 2023, related to these programs. In August 2022, the Creating Helpful Incentives to Produce Semiconductors and Science Act (the “CHIPS Act”) was signed into law. The CHIPS Act provides for a 25% refundable tax credit on certain investments in domestic semiconductor manufacturing. The credit is provided for qualifying property, which is placed in service after December 31, 2022. The CHIPS Act also provides for certain other financial incentives to further semiconductor investments manufacturing. the provisions of the new law and its potential impact to the Company. in The Company is evaluating domestic In August 2022, the Inflation Reduction Act (the “IRA”) was signed into law. The IRA establishes a new book minimum tax of 15% on consolidated adjusted GAAP pre-tax earnings for corporations with average income in excess of $1 billion and is effective for tax years beginning after December 31, 2022. In addition, the IRA also introduced a nondeductible 1% excise tax on the net value of a publicly traded corporation for certain stock year repurchases during (effective for repurchases after December 31, 2022). In the fourth quarter of fiscal 2023, the Company’s calculated excise tax was immaterial and was the cost basis of shares recognized as part of acquired of in Stockholders’ Equity. Consolidated Statement the tax the 49 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements 2. CONCENTRATIONS OF CREDIT RISK 4. PROPERTY AND EQUIPMENT 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., contract manufacturers, which in the aggregate accounted for approximately 37%, 33% and 30% of total revenue in fiscal years 2023, 2022 and 2021, Ltd., respectively. accounted for approximately 12%, 11% and 7% of total revenue in fiscal years 2023, 2022 and 2021, respectively. These customers primarily purchase radio frequency (“RF”) solutions for a variety of mobile devices from the Company’s ACG segment. Electronics Samsung Co., The Company’s three largest accounts receivable balances comprised approximately 54% and 57% of aggregate gross accounts receivable as of April 1, 2023 and April 2, 2022, 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 1, 2023 April 2, 2022 $236,095 $264,367 357,332 345,545 162,321 186,684 $755,748 $796,596 50 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 1, 2023 April 2, 2022 25,842 $ 25,842 $ 463,888 432,305 2,430,307 130,086 2,401,735 128,317 equipment, gross 3,050,123 2,988,199 Less accumulated depreciation Total property and equipment, net (1,900,317) (1,734,608) $ 1,149,806 $ 1,253,591 5. BUSINESS ACQUISITIONS the Company completed the During fiscal 2022, Inc. acquisitions of United SiC and NextInput, the Company (“NextInput”). During fiscal 2021, completed the acquisition of 7Hugs Labs S.A.S. (“7Hugs”). from these acquisitions is attributed to synergies and other benefits that are generated from these transactions. resulting goodwill The 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 these result, pro forma results of operations for 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, $236.7 million. the 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 expanded carbide (“SiC”) The purchase price comprised cash consideration of $227.2 million and contingent consideration of up to $31.3 million which is to be paid to the sellers during the first quarter of fiscal 2024 (in accordance with the the acquisition agreement) due to the terms of achievement of certain revenue and gross margin targets over the period beginning on the acquisition date through December 31, 2022. The estimated fair value of the contingent consideration liability was $9.5 million as of the acquisition date. At April 2, Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 long-term liabilities” the contingent consideration liability was 2022, remeasured to a fair value of $17.6 million and is included in “Other in the Consolidated Balance Sheet. The maximum contingent consideration of $31.3 million has been earned and is the current included Consolidated Balance Sheet as of April 1, 2023, with the increase in fair value recognized in “Other operating expense” in the Consolidated Statement of Income. Refer to Note 7 for further information related to the fair value measurement. liabilities” “Other in in respectively, Consolidated Statements of Income. in “Other operating expense” in the technology impairment assessment, In connection with the Company’s fiscal 2022 annual qualitative goodwill it was determined that the market adoption of the acquired into mobile handsets was NextInput expected to be delayed compared to the previous assumptions. As a result, the Company completed a quantitative assessment of its reporting unit, which of resulted $48.0 million. impairment goodwill charge in a During fiscal years 2023 and 2022, the Company recorded acquisition and integration related costs associated with the acquisition of United SiC totaling in $14.6 million and $12.2 million, in the Consolidated “Other operating expense” Statements 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, respectively, 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 $173.3 million. the Company’s offerings of MEMS-based products for mobile applications, providing sensing solutions for a broad range of applications in other markets. acquisition expanded system The During fiscal years 2023, 2022 and 2021, the Company recorded acquisition and integration related costs associated with the acquisition of NextInput totaling $2.1 million, $2.7 million and $1.8 million, 6. GOODWILL AND INTANGIBLE ASSETS 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 During fiscal years 2023, 2022 and 2021, Company recorded acquisition and integration related costs associated with the acquisition of 7Hugs totaling $0.1 million, $0.2 million and $2.4 million, in “Other operating expense” in the respectively, Consolidated Statements of Income. Other Acquisitions The Company recorded additional acquisition and integration related costs in fiscal years 2023, 2022 and 2021 of $4.1 million, $7.0 million and $23.1 million, respectively, resulting from businesses acquired in fiscal 2020. These costs, which primarily relate to ongoing compensation arrangements, are in the included in “Other operating expense” Consolidated Statements of Income. The changes in the carrying amount of goodwill for fiscal 2023 are as follows (in thousands): HPA CSG ACG Total Balance as of April 2, 2022 (1) NextInput measurement period adjustments United SiC measurement period adjustments Goodwill impairment Effect of changes in foreign currency exchange rates Balance as of April 1, 2023 (1) $501,899 $539,875 $1,733,860 $2,775,634 572 (297) (12,411) (2,685) $501,602 $525,351 $1,733,860 $2,760,813 572 — (12,411) (2,685) — (297) — — — — — — (1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs totaling $682.0 million and $669.6 million as of April 1, 2023 and April 2, 2022, respectively, which were recognized in fiscal years 2009, 2013, 2014 2022 and 2023. During the second quarter of fiscal 2023, the Company updated its organizational structure to more closely align technologies and applications with customers and end markets. Prior to the Reorganization (“Pre-Reorganization”), the Company operated under to the Reorganization (“Post-Reorganization”), it is operating under three segments with a total of eight reporting units. In accordance with ASC 350, quantitative impairment assessments on each reporting unit were performed immediately before and after the change in organizational structure. five reporting units and subsequent two segments with a total of 51 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements Based on the Pre-Reorganization quantitative assessment performed on July 2, 2022, management concluded there was no goodwill impairment. Based on the Post-Reorganization quantitative analysis performed on July 3, 2022 (the “Quantitative Analysis”), it was determined the fair value of five of the eight reporting units significantly exceeded their carrying values. Therefore, for the annual goodwill impairment assessment that was performed as of January 1, 2023, the Company opted to perform a qualitative impairment assessment for the goodwill related to these five reporting units. The Company concluded based on the relevant facts and circumstances, including the Quantitative Analysis performed, it was more likely than not that the fair value of each of these reporting units exceeded their related carrying value and no further impairment testing was required. In addition, based on the Quantitative Analysis, it was determined the fair value of three of the eight reporting units did not significantly exceed their carrying values. Therefore, the Company performed additional quantitative analyses on two of these reporting units and concluded that based on the relevant facts and circumstances, it was more likely than not that the fair value of each of these reporting units exceeded their related carrying value and no further impairment testing was required. As part of ongoing efforts to focus on growth drivers and key markets and to streamline operations, in the fourth quarter of fiscal 2023, the Company began to seek strategic alternatives for the third reporting unit (the Company’s non-core biotechnology business). Given the future funding requirements necessary to further develop its diagnostic testing solutions and achieve the desired results, the Company decided not to invest further in this business. Therefore, the Company determined that there was a more-likely-than-not expectation of selling or disposing of all, or a portion, of this reporting unit, and impairment testing was triggered. An evaluation of the asset group within this reporting unit was performed which resulted in an impairment of equipment and inventory (refer to Note 12 for information). Based on these facts and circumstances, the Company determined the carrying value additional exceeded the fair value of this reporting unit which resulted in a goodwill impairment charge of $12.4 million (representing the entire goodwill assigned to this reporting unit). In fiscal 2022, the Company recorded a goodwill impairment charge of $48.0 million related to its NextInput business. This charge in recorded in “Other operating expense” in the fiscal 2022 Consolidated 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 Trade names IPRD Total (1) April 1, 2023 April 2, 2022 Gross Carrying Amount $872,106 104,616 1,664 910 9,642 $988,938 Accumulated Amortization $382,448 67,485 513 789 N/A $451,235 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 (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. No definite-lived intangible asset impairment charges were recorded for fiscal years 2023 or 2022. Total intangible assets amortization expense was $132.4 million, $150.5 million and $252.9 million in fiscal years 2023, 2022 and 2021, respectively. 52 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 The following table provides the Company’s estimated amortization expense for intangible assets for the periods indicated (in thousands): Fiscal Year 2024 2025 2026 2027 2028 Estimated Amortization Expense $121,000 105,000 95,000 82,000 54,000 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 1, 2023 and April 2, 2022 were $20.4 million and $27.1 million, respectively, and are classified as “Long-term investments” in the Consolidated Balance Sheets. During fiscal years 2023, 2022 and 2021, the Company recorded a loss of $4.2 million and 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 $2.5 million, $14.8 million and $5.9 million during fiscal years 2023, 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 following table sets forth, by level within the fair value hierarchy, financial assets and liabilities measured on a recurring basis (in thousands): Quoted Prices In Active Markets For Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total April 1, 2023 Marketable equity securities Invested funds in deferred compensation plan (1) Contingent earn-out liability (2) $ 1,094 40,653 (31,250) April 2, 2022 Marketable equity securities Invested funds in deferred compensation plan (1) Contingent earn-out liability (2) $ 2,906 39,356 (17,600) $ 1,094 40,653 — $ 2,906 39,356 — $ $ — — — — — — $ — — (31,250) $ — — (17,600) (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. Refer to Note 10 for further information on the Company’s non-qualified deferred compensation plan. (2) The fair value of the contingent consideration liability which related to the acquisition of United SiC (refer to Note 5) was equal to the maximum amount payable at April 1, 2023 and was estimated using an option pricing model at April 2, 2022. 53 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements 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 Details of operating leases are as follows (in thousands): Operating lease expense Short-term lease expense Variable lease expense April 1, 2023 April 2, 2022 $83,490 19,357 69,156 $73,683 17,393 61,511 Fiscal Year 2023 2022 2021 $20,162 $19,178 $17,382 7,062 3,972 7,798 5,386 7,726 4,886 Cash paid for amounts included in the measurement of operating lease liabilities 21,480 20,536 18,697 Right-of-use assets obtained in exchange for new operating lease liabilities 28,940 29,210 12,899 The weighted-average remaining lease term and weighted-average discount rate for operating leases are as follows: Weighted-average remaining lease term (years) Weighted-average discount rate April 1, 2023 April 2, 2022 6.5 3.98% 6.9 2.99% The aggregate future lease payments for operating leases as of April 1, 2023 are as follows (in thousands): Lease Payments $ 22,037 17,516 15,270 12,350 11,270 21,150 99,593 (11,080) $ 88,513 Fiscal Year 2024 2025 2026 2027 2028 Thereafter Total future lease payments Less imputed interest Present value of lease liabilities 54 Notes to Consolidated Financial Statements 9. LONG-TERM DEBT Long-term debt is as follows (in thousands): 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 and issuance costs, net Less current portion of long-term debt Total long-term debt 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 “Credit Agreement”) with Bank of America, N.A., acting as administrative agent, and a syndicate of lenders. The Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017. The Credit Agreement includes a senior revolving line of credit to $300.0 million, and included a senior term loan, that was fully repaid in fiscal 2022. The Revolving Facility capital is available to finance working capital, expenditures and other general corporate purposes. “Revolving Facility”) (the up of Pursuant to the Credit Agreement, the Company 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. (the “LIBOR Transition Amendment”) On April 6, 2022, the Company and the administrative to the Credit agent entered into an amendment Agreement to replace the London Interbank Offered Rate as a reference rate available for use in the computation of interest under the Credit Agreement. As a result of the LIBOR Transition Amendment, at the Company’s option, loans under the Credit Agreement will bear interest at (i) the Applicable Rate (as defined in the Credit Agreement) plus the Term SOFR (as defined in the Credit Agreement) or (ii) the Applicable Rate plus a rate equal to the highest of (a) the federal funds rate plus 0.50%, 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 interest at a rate equal 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, (b) Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 April 1, 2023 April 2, 2022 $ 500,000 $ 500,000 850,000 700,000 2,581 (4,692) (791) $2,048,073 $2,047,098 850,000 700,000 1,666 (3,283) (310) three or six months (as selected by the Company) plus an adjustment (as defined in the 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 Revolving Facility are subject to a commitment fee ranging from 0.150% to 0.200%. During fiscal years 2023 and 2022, there were no borrowings under the Revolving Facility. and The Credit Agreement contains various conditions, covenants representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default. As of April 1, 2023, 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”). The 2024 Notes will mature on December 15, 2024, redeemed in accordance with their unless earlier terms. The 2024 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. to an The 2024 Notes were issued pursuant 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 Act”), or any state securities laws, and, unless so registered, may not be offered or sold in the United 55 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements 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 Rights Company 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 “Exchange Offer a Registration Statement”) relating to the registered exchange offer (the “Exchange Offer”) to exchange the 2024 Notes for a new series of the Company’s 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. Interest is payable on the 2024 Notes on June 15 and December 15 of each year. Interest paid on the 2024 Notes during fiscal 2023 was $8.8 million. the Company Senior Notes due 2029 issued On September 30, 2019, its $350.0 million aggregate principal amount of 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 56 Notes” and collectively with the Initial 2029 Notes, the “2029 Notes”). The 2029 Notes will mature on October 15, 2029, unless earlier redeemed in accordance with their terms. The 2029 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors. 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. and supplemental “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 redemption price equal their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest. In addition, at any time prior to October 15, 2024, the Company may redeem up to 35% of the original aggregate principal amount of the 2029 Notes with the proceeds of one or more equity offerings, at a redemption price equal to 104.375%, plus accrued and unpaid interest. Furthermore, at any time on or after October 15, 2024, the Company may redeem the 2029 Notes, in whole or in part, at the redemption prices specified in the 2019 Indenture, plus accrued and unpaid interest. Interest is payable on the 2029 Notes on April 15 and October 15 of each year. Interest paid on the 2029 Notes during fiscal years 2023, 2022 and 2021 was $37.2 million, $37.2 million and $31.6 million, respectively. the Company Senior Notes due 2031 On September 29, 2020, issued its $700.0 million aggregate principal amount of 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 2020 Indenture contains substantially the same customary events of default and negative covenants as the 2021 Indenture. Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 At any time prior to April 1, 2026, the Company may redeem all or part of the 2031 Notes, at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest. In addition, at any time prior to April 1, 2026, the Company may redeem up to 40% of the original aggregate principal amount of the 2031 Notes with the proceeds of one or more to equity offerings, at a redemption price equal 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 2023, 2022 and 2021 was $23.6 million, $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 accrued and unpaid interest. to 103.50% of Interest paid on the 2025 Notes during fiscal 2021 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 a term loan. In connection with the redemption, the Company recognized a loss on debt extinguishment of $61.0 million as “Other (expense) income, net” in the fiscal 2021 Consolidated Statement of Income. The loss a extinguishment $57.3 million redemption premium and a $3.7 million net write-off of unamortized debt issuance costs and bond premium. The primary purpose of the redemption was to reduce future interest expense. consisted debt on of Interest paid on the 2026 Notes during fiscal 2021 was $37.3 million. to (compared respectively Fair Value of Long-Term Debt The Company’s debt is carried at amortized cost and fair value quarterly for disclosure is measured at purposes. The estimated fair value of the 2024 Notes, the 2029 Notes and the 2031 Notes as of April 1, 2023 was $464.2 million, $785.9 million and $565.3 million, the outstanding principal amount of $500.0 million, $850.0 million and $700.0 million, respectively). 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, respectively (compared to the outstanding principal amount of $500.0 million, $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. fiscal 2023, the Company Interest Expense During recognized $72.3 million of interest expense primarily related to the 2024 Notes, the 2029 Notes and the 2031 Notes, which was partially offset by $3.9 million of interest capitalized to property and equipment. During fiscal 2022, the Company recognized $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 property and equipment. During the 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. fiscal 2021, 10. RETIREMENT BENEFIT PLANS offers 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 contributory plans with 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 eligibility differing and 57 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements up to the maximum legal limits (as defined by Federal regulations). Employer contributions to the 401(k) plan are made at the discretion of the Company’s Board of Directors. Employees are immediately vested in their own contributions as well as employer matching contributions. In total, the Company contributed $18.8 million, $17.6 million and $15.6 million to its domestic and foreign defined contribution plans during fiscal years 2023, 2022 and 2021, 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 1, 2023 and April 2, 2022 (included in “Other non-current assets” in the Consolidated Balance Sheets). The pension benefit obligations of both plans were $9.4 million and $12.1 million as of April 1, 2023 and April 2, 2022, 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 require the use of significant including assumptions based on local economic conditions. The approximately net $0.5 million for fiscal 2023 and $0.6 million for fiscal years 2022 and 2021. cost was judgment periodic benefit becomes the Company’s creditors in the event Non-Qualified Deferred Compensation Plan the Board of Certain employees and members 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 $40.7 million and $39.4 million as of April 1, 2023 and April 2, 2022, respectively. The current portion of the deferred compensation obligation and fair value of the assets held in the rabbi trust were $1.6 million and $1.5 million as of April 1, 2023 and April 2, 2022, respectively, and are included in “Other current assets” and “Accrued liabilities” in the Consolidated that amount insolvent. The 58 the Balance Sheets. The non-current portion of deferred compensation obligation and fair value of the assets held in the rabbi trust were $39.1 million and $37.9 million as of April 1, 2023 and April 2, 2022, respectively, and are included in “Other non-current long-term liabilities” in the assets” and “Other Consolidated Balance Sheets. 11. COMMITMENTS AND CONTINGENT LIABILITIES capital million, (including totaled which agreement) of Purchase Obligations the Company’s purchase As of April 1, 2023, obligations and commitments purchase commitments under a long-term capacity approximately reservation approximately $1,283.7 $657.1 million is expected to be paid during fiscal 2024. In subsequent years, the Company expects to pay approximately $356.5 million, $227.6 million and $42.5 million related to these purchase obligations 2027, 2025, during respectively. Noncancelable obligations represent 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 1, 2023. 2026 purchase years fiscal and Amidst ongoing industry-wide supply constraints, the Company entered into a long-term capacity reservation agreement with a foundry supplier during the second quarter of fiscal 2022. Under this agreement, the Company was required to purchase, and the foundry supplier was required to supply, a certain number of wafers (at predetermined sales prices) for calendar years 2022 through 2025. In connection with this agreement, the Company paid a refundable deposit (which was recorded in “Other non-current assets” in the Consolidated Balance Sheets), and if the purchase commitments per the agreement were not met, under certain circumstances the supplier could deduct the amount of the purchase shortfall from the prepaid refundable deposit at the end of each calendar year. fiscal 2023, the Company During experienced unexpectedly weakened demand for 5G handsets in China and EMEA due to unprecedented disruption resulting, in part, from measures taken in China to control in Ukraine. As a result, the Company did not meet the minimum purchase commitments under this long-term capacity reservation agreement. the COVID-19 pandemic and the war fiscal 2023, resulted in an impairment the purchase In the first quarter of shortfall to the prepaid refundable deposit of approximately $13.0 million, and additional reserves of approximately $11.0 million inventory in excess of demand forecasts were for Notes to Consolidated Financial Statements the Company assessed the recorded. Additionally, future minimum purchase commitments over the remaining term of the agreement and recorded an estimated shortfall of $86.0 million, of which $8.0 million was recorded in “Other current liabilities” and $78.0 million was recorded in “Other long-term in accordance with ASC 330. These liabilities” transactions resulted in a total increase to cost of goods sold of $110.0 million in the first quarter of fiscal 2023. of deposit refundable In October 2022, the Company renegotiated the terms the agreement with the foundry supplier, which of the agreement included extending the duration of through calendar year 2026. As a result of the amended agreement, in the second quarter of fiscal 2023, the Company recorded an impairment to the prepaid approximately $38.0 million and additional reserves of approximately inventory in excess of demand $5.0 million for forecasts, which reduced the estimated shortfall liability that was previously recorded by $43.0 million. fiscal 2023, In the third quarter of the Company recorded an impairment to the prepaid refundable deposit of approximately $8.0 million and additional reserves of approximately $4.0 million for inventory in excess of demand forecasts, which reduced the estimated shortfall that was previously liability recorded by $12.0 million. There was no impact to the statements of operations in the second or third quarters of fiscal 2023. In the fourth quarter of fiscal 2023, the Company elected to apply the remaining prepaid refundable deposit against portions of its monthly purchase commitments for the term of the amended agreement in lieu of ordering certain additional silicon wafers. This election was made in order to better align component inventory with the timing of the forecasted finished goods demand and resulted in an impairment to the prepaid refundable deposit of $71.0 million, increasing cost of goods sold by $71.0 million in the fourth quarter of fiscal 2023. forecasts, legal The Company considers customer factors obligations, macroeconomic and geopolitical as well as market and industry trends, when assessing future minimum purchase commitments. These significant management judgment and estimates and, to the extent that these assumptions are incorrect or there are further declines in customer forecasts, additional charges may be recorded in future periods. include factors Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Lease Commitments Refer commitments. to Note 8 for disclosures related to lease 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 59 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements 12. RESTRUCTURING fiscal 2023, The Company initiated actions to improve efficiencies in its operations and further align the organization with its strategic objectives, which resulted in approximately $32.5 million of restructuring charges recorded in the nine months ended December 31, 2022 (primarily related to the impairment of equipment and a contract cancellation fee). As part of ongoing efforts to focus on growth drivers and key markets and to streamline operations, in the the Company began to seek strategic alternatives related to its non-core fourth quarter of biotechnology business. Given the future funding requirements necessary to further develop its diagnostic testing solutions and achieve the desired results, the Company decided not to invest further in this business. Therefore, the Company determined that there was a more-likely-than-not expectation of selling or disposing of all, or a portion, of this reporting unit, and impairment testing was triggered. An evaluation of the asset group within this reporting unit was performed which resulted in an impairment of equipment and inventory of approximately $74.8 million and other charges of approximately $6.8 million. Based on these facts and circumstances, the Company determined that the carrying value exceeded the fair value of this reporting unit which resulted in a goodwill impairment charge of approximately $12.4 million (representing the entire goodwill assigned to this reporting unit). The restructuring charges recorded by the Company are not allocated to its reportable segments. The Company will continue to evaluate its operating footprint, cost structure and strategic opportunities, but does not expect to incur additional material charges related to its fiscal 2023 restructuring initiatives. The following table summarizes the charges resulting from the 2023 restructuring actions (in thousands): Contract termination and other costs Asset impairment costs Goodwill impairment (see Note 6) One-time employee termination benefits Total Total Cost of Goods Sold Other Operating Expense $ 3,600 $19,183 $ 22,783 88,426 45,422 12,411 — 12,411 2,885 2,885 — $46,604 $79,901 $126,505 43,004 The asset impairment costs include inventory write-downs (for inventory expected to be disposed of) and equipment impairments (to adjust the carrying value of certain equipment to reflect its fair value). The estimated fair value of the equipment was determined using a market approach based upon quoted market prices from auction data. The significant inputs related to valuing these assets are classified as Level 2 in the fair value measurement hierarchy. The following table summarizes the activity related to the Company’s restructuring liabilities for the fiscal year ended April 1, 2023 (in thousands): Accrued restructuring balance as of April 2, 2022 Costs incurred and charged to expense Cash payments Accrued restructuring balance as of April 1, 2023 One-Time Employee Termination Benefits $ Contract Termination and Other Costs Total — $ — $ 2,885 (2,885) 22,783 (17,535) — $ 5,248 $ — 25,668 (20,420) $ 5,248 During fiscal years 2022 and 2021, the Company’s restructuring charges were $2.1 million and $2.7 million, respectively, primarily related to fiscal 2019 actions to reduce operating expenses and improve manufacturing cost structure. 13. INCOME TAXES Income (loss) before income taxes consists of the following components (in thousands): United States Foreign Total 60 2023 Fiscal Year 2022 69,938 $125,362 682,018 1,111,146 $ 124,629 $1,181,084 $807,380 $(466,070) $ 590,699 2021 Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 The components of the income tax provision are as follows (in thousands): 2023 Fiscal Year 2022 2021 Current tax (expense) benefit: Federal State Foreign Deferred tax (expense) benefit: Federal State Foreign Total $(21,704) $ (16,886) $(11,043) (140) (80,722) (91,905) (274) (98,696) (115,856) (488) (65,430) (87,622) 60,351 2,371 3,423 66,145 (35,545) (3,771) 57,452 18,136 $(21,477) $(147,731) $(73,769) (18,398) (2,762) (10,715) (31,875) 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 2023, 2022 and 2021 is as follows (dollars in thousands): Income tax expense at statutory federal rate (Increase) decrease resulting from: State benefit (expense), 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)(3) Permanent reinvestment assertion Impairments and acquisition related adjustments Other income tax (expense) benefit 2023 Fiscal Year 2022 2021 Amount Percentage Amount Percentage Amount Percentage $ (26,172) 21.0% $(248,028) 21.0% $(169,550) 21.0% 2,259 97,809 (1.8) (78.5) (1,888) 118,877 0.2 (10.1) (743) 92,532 0.1 (11.5) (950) 73,491 0.8 (59.0) (25,679) 148,932 2.2 (12.6) 22,286 85,851 (2.8) (10.6) (10,852) 385 8.7 (0.3) (1,962) (9,036) (9,437) 1.6 7.2 7.6 786 231 (3,048) 11,148 (3,262) (128,708) (402) 103.3 0.3 (130,874) (1,033) (5,695) (2,207) 4.5 1.8 (12,198) (1,695) (0.1) (0.1) 0.3 (0.9) 0.3 11.1 0.1 1.0 0.1 9,026 (1,232) (1,656) 9,545 (9,979) (100,830) (8,488) (919) 388 (1.1) 0.2 0.2 (1.2) 1.2 12.5 1.1 0.1 (0.1) $ (21,477) 17.2% $(147,731) 12.5% $ (73,769) 9.1% (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 a period cost. (3) Beginning in fiscal 2023 and as required by the Tax Cuts and Jobs Act, the Company was required to capitalize and amortize research and development expenses which were previously expensed for U.S. tax purposes. 61 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 1, 2023 April 2, 2022 Deferred income tax assets: Research and other tax credits $ 57,048 $ 56,735 Employee benefits Inventories Net operating loss carryforwards Lease liabilities Prepaid expenses Deferred revenue Capitalized research and development expenses 30,309 24,374 22,189 18,768 17,360 14,475 34,189 11,592 27,024 17,905 — — 13,794 6,040 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 will not be realized. The valuation allowance against deferred tax assets years 2023 and 2022 by decreased in fiscal $0.4 million and $0.2 million, respectively, and increased in fiscal 2021 by $1.2 million. The components of the change in valuation allowances and ending balances are as follows (in thousands): 2023 Fiscal Year 2022 2021 $36,281 $36,512 $35,280 583 1,339 2,144 (968) (1,570) (912) $35,896 $36,281 $36,512 Beginning valuation allowance Domestic net operating losses and credits Foreign net operating losses and other deferred tax assets Ending valuation allowance Components of ending valuation allowance: Other 15,898 10,332 Domestic deferred tax Total deferred income tax assets 214,215 163,817 Valuation allowance (35,896) (36,281) Total deferred income tax assets, net of valuation allowance $ 178,319 $ 127,536 Deferred income tax liabilities: Intangible assets $ (69,050) $ (79,452) Property and equipment (39,806) (53,425) Accrued tax on unremitted foreign earnings Right-of-use assets Other Total deferred income tax liabilities Net deferred income tax asset (liability) Amounts included in the (25,948) (22,988) (17,457) (16,591) (2,645) (2,884) (154,906) (175,340) $ 23,413 $ (47,804) Consolidated Balance Sheets: Other non-current assets $ 38,060 $ 36,824 Other long-term liabilities (14,647) (84,628) Net deferred income tax asset (liability) $ 23,413 $ (47,804) The Company has recorded a valuation allowance against certain U.S. and foreign deferred tax assets as of April 1, 2023 and April 2, 2022. These valuation upon allowances established based were 62 assets $35,570 $34,987 $33,647 Foreign deferred tax assets 326 1,294 2,865 Valuation allowance $35,896 $36,281 $36,512 of tax loss if unused. As of April 1, 2023, the Company had federal tax loss carryforwards of approximately $32.1 million that expire in fiscal years 2024 to 2043, if unused, and state approximately carryforwards $107.9 million that expire in fiscal years 2024 to 2043, research credits of Federal $102.8 million expire in fiscal years 2040 to 2043, and state research credits of $68.3 million expire in fiscal years 2024 to 2043. The Company had foreign tax loss carryforwards of $96.4 million, which expire in fiscal years 2024 to 2033, if unused. The utilization of 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 permanently reinvested on certain earnings of its 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 taxation. The remainder of Notes to Consolidated Financial Statements 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. In fiscal 2022, 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 the Company December 2027. negotiated an extension to its tax holiday in Singapore, which is currently expected to expire in December 2031. Incentives from these countries are subject to the Company meeting certain employment and investment requirements. Relative to the statutory tax by $65.5 million (an impact of approximately $0.64 per basic and diluted share) in fiscal 2023 and $128.4 million (an impact of approximately $1.17 and $1.15 per basic and diluted share, respectively) in fiscal 2022 as a result of these agreements. decreased expense income rate, tax $144.1 million $152.3 million, The Company’s gross unrecognized tax benefits totaled and $134.1 million as of April 1, 2023, April 2, 2022, and these amounts, respectively. Of April 3, 2021, $145.9 million, $137.5 million and $128.7 million as of April 1, 2023, April 2, 2022 and April 3, 2021, respectively, represent the amounts of unrecognized tax benefits that, the if effective tax rate in each of the fiscal years. recognized, would impact The Company’s gross unrecognized tax benefits increased from $144.1 million as of April 2, 2022 to $152.3 million as of April 1, 2023, primarily due to tax positions and the effect of current provision-to-return adjustments on prior year positions. year A summary of the changes in the amount of gross unrecognized tax benefits is as follows (in thousands): 2023 Fiscal Year 2022 2021 Beginning balance $144,055 $134,068 $119,222 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 9,718 11,826 10,048 2,467 3,049 6,240 (363) (1,669) (348) (3,546) (3,219) (1,094) — — — Ending balance $152,331 $144,055 $134,068 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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 2023, 2022 and 2021, the Company recognized $0.9 million, $(5.1) million and $0.8 million, interest and penalties related to respectively, of uncertain tax positions. Accrued interest and penalties related totaled $1.9 million, $1.0 million and $6.2 million as of April 1, 2023, April 2, 2022 and April 3, 2021, respectively. unrecognized benefits tax to The unrecognized tax benefits of $152.3 million and accrued interest and penalties of $1.9 million at the end of fiscal 2023 are recorded on the Consolidated long-term Balance Sheet as a $21.0 million other liability, with the balance reducing the carrying value of the gross deferred tax assets. to the regarding uncertainties Due of examinations and the amount of settlements that may be paid, the Company believes it is reasonably possible that $22.1 million of gross unrecognized tax benefits will be reduced within the next 12 months. to tax authorities, if any, timing The Company files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. The Company’s fiscal 2020 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 years subject to examination vary by jurisdiction. 63 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 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): 2023 Fiscal Year 2022 2021 Numerator: Numerator for basic and diluted net income per share — net income available to common stockholders $103,152 $1,033,353 $733,611 Denominator: Denominator for basic net income per share — weighted-average shares 102,206 110,196 114,034 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 813 1,350 1,982 103,019 111,546 116,016 $ $ 1.01 $ 1.00 $ 9.38 $ 9.26 $ 6.43 6.32 In the computation of diluted net income per share for fiscal 2023, approximately 0.8 million shares of outstanding stock-based awards were excluded because the effect of inclusion would have been anti-dilutive. An immaterial number of shares of outstanding stock-based awards were excluded from the computation of diluted net income per share for fiscal years 2022 and 2021 because the effect of their inclusion would have been antidilutive. their 15. STOCK-BASED COMPENSATION Summary of Stock Plans units awarded for fiscal 2023 under the 2012 Plan was 0.2 million shares. No further awards can be granted under this plan. 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. No further awards can be granted under these plans. consultants, contractors advisors TriQuint agents, and of and reapproved 2012 Stock Incentive Plan — Qorvo, Inc. The 2012 Stock Incentive Plan (the “2012 Plan”) was assumed by the Company in connection with the Business Combination the Company’s stockholders on August 8, 2017 for purposes of Section 162(m) of the Internal Revenue the Company was Code. Under permitted to grant stock options and other types of equity incentive awards, such as stock appreciation rights, restricted stock awards, performance shares and performance units. The aggregate number of shares subject to performance-based restricted stock the 2012 Plan, by 64 of the upon closing the grant of stock options, 2013 Incentive Plan — Qorvo, Inc. Effective the Business Combination, the Company assumed the TriQuint, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”), originally adopted by TriQuint, allowing the Company to issue awards under this plan. The 2013 Incentive Plan replaced the TriQuint 2012 Incentive Plan and restricted provided for stock units, stock appreciation rights and other stock or cash awards to employees, officers, directors, consultants, independent contractors of TriQuint and its subsidiaries and to the Business affiliates who were such prior the Combination or who became employed by Company or the the closing of its affiliates after Business Combination. No further awards can be granted under this plan. advisors agents, and 2015 Inducement Stock Plan — Qorvo, Inc. The 2015 Inducement Stock Plan provided for the grant of stock options, restricted stock units, stock appreciation rights and other stock-based awards to persons as a material to become employees of the Company or its affiliates. No further awards can be granted under this plan. inducement Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 and directors employees, 2022 Stock Incentive Plan — Qorvo, Inc. The Company currently grants equity-based awards to eligible independent contractors under the 2022 Stock Incentive Plan (the “2022 Plan”), which was approved by the Company’s stockholders on August 9, 2022. Under the 2022 Plan, the Company is permitted to grant awards, such restricted stock awards, as restricted stock units, performance stock options, stock appreciation rights and phantom stock awards, to eligible participants. The maximum number of shares issuable under the 2022 Plan may not exceed 4.5 million shares (subject to adjustment for anti-dilution April 1, 2023, approximately 4.4 million shares were available for issuance under the 2022 Plan. performance purposes). shares, units, As of Employee Stock Purchase Plan — Qorvo, Inc. Effective upon closing of the Business Combination, the Company assumed the TriQuint Employee Stock Purchase Plan (the “ESPP”), which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. All regular full-time 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 the lower of Company’s common stock on the first or last day of each six-month purchase period. As of April 1, 2023, 2.6 million shares were available for future issuance this plan. The Company makes no cash under contributions to the ESPP, but bears the expenses of its administration. The Company issued 0.3 million shares under the ESPP in fiscal 2023, 0.3 million shares in fiscal 2022 and 0.4 million shares in fiscal 2021. the closing price per share of For fiscal years 2023, 2022 and 2021, the primary stock-based awards and their general terms and conditions are as follows: Restricted stock units granted by the Company in fiscal years 2023, 2022 and 2021 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 2023, 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 $28.5 million was recognized upon the grant of 0.3 million restricted share units to certain officers of the Company. compensation stock-based 2023, 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 $105.6 million, $83.5 million and $89.3 million, for fiscal years 2023, 2022 and 2021, respectively, net of expense capitalized into inventory. A summary of activity with respect to stock options under the Company’s director and employee stock plans follows: Weighted- Average Remaining Contractual Term (in years) Weighted- Average Exercise Price Aggregate Intrinsic Value (in thousands) Options (in thousands) Outstanding as of April 2, 2022 Granted Exercised Canceled Forfeited Outstanding as of April 1, 2023 Vested and expected to vest as of April 1, 2023 Options exercisable 258 $15.67 — — (187) $13.74 (2) — $14.19 — 69 $20.95 0.35 $5,562 69 $20.95 0.35 $5,562 as of April 1, 2023 69 $20.95 0.35 $5,562 65 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $101.57 as of March 31, 2023 (the last Nasdaq trading day prior to the fiscal year end on April 1, 2023), 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 1, 2023, 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 historical volatility, dividend yield, term and risk-free interest rate. There were no options granted during fiscal years 2023, 2022 and 2021. The total intrinsic value of options exercised during fiscal years 2023, 2022 and 2021 was $16.5 million, $27.1 million and $66.7 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 $32.7 million for fiscal 2023 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. if actual ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods from those estimates. Based upon historical pre-vesting forfeiture the Company assumed an annualized experience, forfeiture rate of 1.4% for both stock options and restricted stock units. forfeitures differ A summary of activity with respect to restricted stock units (“RSUs”) awarded under the Company’s director and employee stock plans follows: Balance as of April 2, 2022 Granted Vested Forfeited RSUs (in thousands) Weighted-Average Grant-Date Fair Value 1,539 1,125 (703) (129) $126.46 104.16 111.85 122.08 Balance as of April 1, 2023 1,832 $118.38 total remaining unearned As of April 1, 2023, compensation cost related to unvested restricted stock units was $137.6 million, which will be amortized over the weighted-average remaining service period of approximately 1.3 years. 66 The total intrinsic value of restricted stock units that vested during fiscal years 2023, 2022 and 2021 was $74.1 million, $163.6 million and $121.8 million, respectively, based upon the fair market value of the Company’s common stock on the vesting date. The Company settles restricted stock units with newly issued shares of the Company’s common stock. 16. STOCKHOLDERS’ EQUITY Stock Repurchase On November 2, 2022, 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 the remaining authorized dollar amount under a prior program terminated concurrent with the new authorization. or privately regulatory requirements, Under the current program, share repurchases are made in accordance with applicable securities laws on in the negotiated open market transactions. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchases depends on general market conditions, alternative investment opportunities and other considerations. The program does not 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. As of January 1, 2023, the Company’s share repurchases in excess of issuances are subject to a 1% excise tax enacted by the IRA. The excise tax is recognized as part of the cost basis of shares acquired in the Consolidated Statements of Stockholders’ Equity. require the Company respectively, the During fiscal years 2023, 2022 and 2021, repurchased approximately 8.7 million Company shares, 7.3 million shares and 3.6 million shares of its common stock, for approximately $862.2 million, $1,152.3 million and $515.1 million, respectively (including transaction costs and excise tax, as applicable) under the prior and current share repurchase 2023, As approximately $1,705.0 million remains available for repurchases under the current share repurchase program. programs. April 1, of Notes to Consolidated Financial Statements Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Common Stock Reserved For Future Issuance As of April 1, 2023, the Company had reserved a total of approximately 8.9 million of its authorized 405.0 million shares of common stock for future issuance as follows (in thousands): 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 69 4,398 2,639 1,832 8,938 17. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION In the second quarter of fiscal 2023, the Company updated its organizational structure to more closely align technologies and applications with customers and end markets. Prior to this organizational change, the Company operated under two segments (MP and IDP) and subsequent to this organizational change, the Company is operating under three segments (HPA, CSG and ACG). The Company’s Chief Executive Officer, who is also the Company’s chief operating decision maker (“CODM”), allocates resources and evaluates the performance of each of the three operating segments primarily based on operating income. All prior-period segment data has been adjusted to reflect these three operating segments. HPA is a leading global supplier of RF and power solutions for automotive, defense and aerospace, cellular infrastructure, broadband and other markets. HPA leverages a diverse portfolio of differentiated technologies and products to support multiyear growth trends, the increasing semiconductor spend in defense and 5G deployments outside of China. including electrification, renewable energy, CSG is a leading global supplier of connectivity and sensor solutions, with broad expertise spanning UWB, Matter®, Bluetooth® Low Energy, Zigbee®, Thread®, Wi-Fi®, cellular Internet of Things, MEMS-based sensors and BAW-based sensors. CSG combines the connectivity and sensors businesses formerly split between MP and IDP. CSG’s markets include smart home, industrial automation, automotive, smartphones, wearables, gaming, and industrial and enterprise access points. ACG is a leading global supplier of cellular RF solutions for smartphones, wearables, laptops, tablets and other devices. ACG leverages world-class technology and systems-level expertise to deliver a broad portfolio of high performance cellular products to the world’s leading smartphone and consumer electronics companies. ACG is a highly diversified supplier of custom and open market cellular solutions, serving iOS and Android original equipment manufacturers. The “All other” category includes operating expenses such as stock-based compensation expense, amortization of intangible assets, restructuring related charges, acquisition and integration related costs, charges associated with a long-term capacity reservation agreement, goodwill impairment, 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 CODM does not evaluate operating segments using discrete asset information. The Company’s operating segments do not record intercompany revenue. The Company does not allocate gains and losses from investments, interest expense, other (expense) income, or taxes to operating segments. 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. 67 Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2023 Notes to Consolidated Financial Statements The following tables present details of the Company’s operating and reportable segments and a reconciliation of the “All other” category (in thousands): 2023 Fiscal Year 2022 2021 Revenue: HPA CSG ACG Total revenue Operating income (loss): HPA CSG ACG All other Operating income Interest expense Other income (expense), net Income before income taxes Reconciliation of “All other” category: Stock-based compensation expense Amortization of intangible assets Restructuring related charges Acquisition and integration related costs Charges associated with a long-term capacity reservation agreement (1) Goodwill impairment Other (2) Loss from operations for “All other” (1) Refer to Note 11 for additional information. $ 727,187 $ 707,395 $ 803,320 653,445 2,558,542 703,881 3,234,438 474,364 2,367,848 $3,569,399 $4,645,714 $4,015,307 $ 198,820 $ 210,441 $ 256,529 66,576 968,573 (385,051) 107,814 1,233,388 (325,574) (72,080) 627,708 (571,280) 183,168 1,226,069 906,627 (68,463) 9,924 (63,326) 18,341 (75,198) (24,049) $ 124,629 $1,181,084 $ 807,380 2023 Fiscal Year 2022 2021 $ (105,580) $ (132,126) (114,094) (23,311) (83,507) $ (150,128) (2,121) (27,964) (89,322) (252,137) (2,722) (32,946) (181,000) (12,411) (2,758) — (48,000) (13,854) — — (7,924) $ (571,280) $ (325,574) $ (385,051) (2) 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 2023 Fiscal Year 2022 2021 $1,817,960 $1,928,403 $1,631,110 1,579,017 1,499,212 363,523 620,620 248,708 345,869 192,949 251,610 741,405 498,966 308,642 202,426 $3,569,399 $4,645,714 $4,015,307 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 68 April 1, 2023 April 2, 2022 $928,428 169,215 51,145 $1,007,463 192,416 53,712 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 1, 2023 and April 2, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 1, 2023, 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 1, 2023 and April 2, 2022, and the results of its operations and its cash flows for each of the three years in the period ended April 1, 2023, 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 1, 2023, 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 19, 2023 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. Inventory—Valuation Description of the Matter the Company assesses the valuation of all The Company’s inventory, net totaled $796.6 million as of April 1, 2023, representing approximately 11.9% 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. 69 How We Addressed the Matter in Our Audit 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 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 19, 2023 /s/ Ernst & Young LLP 70 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 1, 2023, 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 1, 2023, 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 1, 2023 and April 2, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 1, 2023, and the related notes and our report dated May 19, 2023 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 19, 2023 /s/ Ernst & Young LLP 71 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. ITEM 9A. CONTROLS AND PROCEDURES. (a) Evaluation of disclosure controls and procedures Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. required disclosure. regarding our communicated accumulated and to the controls disclosure Company’s As of the end of the period covered by this report, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that and procedures were effective, as of such date, to enable the Company to record, process, summarize and report in a timely manner the information that the Company is required to disclose in its Exchange Act reports. Our Chief Executive Officer and Chief Financial Officer also concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, in ensuring that information required to be disclosed by the Company in the reports that the Exchange Act is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. files or submits under it for the preparation internal those reporting financial and statements directors, management and other personnel, to provide reasonable assurance regarding the reliability of of financial external consolidated purposes in accordance with U.S. generally accepted control over accounting principles. Our financial and policies includes reporting procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements. Management assessed the effectiveness of our internal control over financial reporting as of April 1, 2023. 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 1, 2023, 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 1, 2023, 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 1, 2023 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 Chief Financial Officer and effected by our board of the Exchange Act. Our internal control over 72 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 2023 Annual definitive proxy statement Meeting captions the under Stockholders “Committees and Meetings,” “Corporate Governance,” Director “Executive Nominations,” of Directors,” and the information therein is incorporated herein by reference. for 1 — Election Officers,” and “Procedures “Proposal 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, 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 in accordance with applicable law. ITEM 11. EXECUTIVE COMPENSATION. Information required by this Item may be found in our definitive proxy statement for our 2023 Annual Meeting of Stockholders under the captions “Executive Committee Compensation” Interlocks and Insider Participation,” “Compensation Committee Report,” “Compensation of Executive Officers,” “Compensation of Directors,” “CEO Pay Ratio Disclosure,” and the information therein is incorporated herein by reference. “Compensation and Information required by this Item may be found in our definitive proxy statement for our 2023 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 2023 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 2023 Annual Meeting of Stockholders under the captions “Proposal 3 — Ratification Qorvo’s Independent Registered Public Accounting Firm” and “Corporate Governance,” and the information therein is incorporated herein by reference. Appointment of of 73 PART IV ITEM 15. EXHIBIT 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 1, 2023 and April 2, 2022. ii. Consolidated Statements of Income for fiscal years 2023, 2022 and 2021. iii. Consolidated Statements of Comprehensive Income for fiscal years 2023, 2022 and 2021. iv. Consolidated Statements of Stockholders’ Equity for fiscal years 2023, 2022 and 2021. v. Consolidated Statements of Cash Flows for fiscal years 2023, 2022 and 2021. 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. 74 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, Second Amended and Restated Bylaws of Qorvo, Inc., adopted on November 9, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 10, 2022 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 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. 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))* 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))* 75 Description 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 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)* to the Qorvo, (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 Inc. 2012 Stock Incentive Plan (incorporated by reference to Officers) pursuant Exhibit 10.32 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* to the Qorvo, Form of Restricted Stock Unit Agreement (Performance-Based Award for Senior Officers (TSR)) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Award Agreement (Director Annual/Supplemental RSU) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)* Form of Restricted Stock Unit Award Agreement election) pursuant Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)* (deferral Inc. 2012 Stock Incentive Plan (incorporated by reference to (Director Annual/Supplemental RSUs) to the Qorvo, Qorvo, Inc. Cash Bonus Plan (As Amended and Restated Through June 9, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2016)* Qorvo, Inc. 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)* 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 76 Exhibit No. 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 21 22 23.1 31.1 31.2 32.1 32.2 101 104 Description 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)* 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 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K filed with SEC on May 20, 2022) Qorvo, Inc. 2022 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 10, 2022)* Form of Restricted Stock Unit Agreement (Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2022 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2022)* Form of Restricted Stock Unit Agreement (Director Annual/Supplemental RSUs) pursuant to the Qorvo, Inc. 2022 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 November 3, 2022)* Form of Restricted Stock Unit Agreement (Performance-Based and Service-Based Award for Senior Officers) pursuant to the Qorvo, Inc. 2022 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 November 3, 2022)* 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 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 Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The following materials from our Annual Report on Form 10-K for the fiscal year ended April 1, 2023, 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 Consolidated Statements of Income; (iii) (ii) The cover page from our Annual Report on Form 10-K for the year ended April 1, 2023, formatted in iXBRL * Executive compensation plan or agreement Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 001-36801. The SEC file number for RFMD is 000-22511. 77 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 19, 2023 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 19, 2023. /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: Senior Vice President and 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 78 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] 

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