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What changed in Qorvo, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Qorvo, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+322 added−312 removedSource: 10-K (2022-05-20) vs 10-K (2021-05-24)

Top changes in Qorvo, Inc.'s 2023 10-K

322 paragraphs added · 312 removed · 219 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

55 edited+39 added−37 removed15 unchanged
Biggest changeIDP is a global supplier of radio frequency ("RF"), system-on-a-chip ("SoC") and power management solutions for applications in wireless infrastructure, defense, Wi-Fi, smart home, automotive and IoT. Our MP segment supplies RF solutions to global consumer product companies, and our IDP segment supplies a more diverse portfolio of products with generally longer life cycles to a broader base of customers.
Biggest changeOur MP segment supplies RF solutions to global consumer product companies, and our IDP segment supplies a more diverse portfolio of products with generally longer life cycles to a broader base of customers and end markets. Our design expertise and manufacturing capabilities span multiple process technologies. Our primary wafer fabrication facilities are in North Carolina, Oregon and Texas.
Manufacturing The majority of our products are multi-chip modules utilizing multiple semiconductor and acoustic material processing technologies. These products have varying degrees of complexity and contain semiconductors and other components that are manufactured internally or sourced from outside supply chain partners.
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 other components that are manufactured internally or sourced from outside supply chain partners.
Access to Public Information We make available, free of charge through our website (http://www.qorvo.com), our annual and quarterly reports on Forms 10-K and 10-Q (including related filings in iXBRL format) and current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") as soon as reasonably practicable after we electronically file these reports with, or furnish them to, the United States Securities and Exchange Commission ("SEC").
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 public may also request a copy of our forms filed with the SEC, without charge upon written request, directed to: Investor Relations Department Qorvo, Inc., 7628 Thorndike Road, Greensboro, NC 27409-9421 The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K.
The public may also request a copy of our forms filed with the SEC, without charge upon written request, directed to: Investor Relations Department Qorvo, Inc., 7628 Thorndike Road, Greensboro, NC 27409-9421 The information contained on, or that can be accessed through, our website is not incorporated by reference or considered to be a part of this Annual Report on Form 10-K.
As an RBA member, we have adopted the RBA Code of Conduct, which establishes standards to ensure that working conditions are safe, that employees are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. The RBA Code of Conduct has been reflected in our other employee policies and procedures.
As a member of the RBA, we have adopted the RBA Code of Conduct, which establishes standards to ensure that working 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.
We combine these technologies with proprietary design methods, intellectual property ("IP") and other expertise to improve performance, increase integration and reduce the size and cost of our products. We develop and qualify advanced packaging technologies to reduce component size, improve performance and reduce package costs.
We combine these technologies with proprietary design methods, intellectual property ("IP") and other expertise to improve performance, increase integration and reduce the size and cost of our products. 7 Table of Contents We develop and qualify advanced packaging technologies to reduce component size, improve performance and reduce package costs.
We benchmark our compensation and benefit packages annually to ensure we remain competitive with our peers and continue to attract and retain talent throughout our organization. 10 Table of Contents Employee Recruitment, Retention and Development We are committed to recruiting, hiring, retaining, promoting and engaging a diverse workforce to best serve our global customers.
We 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. Employee Recruitment, Retention and Development We are committed to recruiting, hiring, retaining, promoting and engaging a diverse workforce to best serve our global customers.
Our manufacturing facilities worldwide are certified to the ISO 9001 quality standard, and select locations are certified to additional automotive (IATF 16949), aerospace (AS 9100) and environmental (ISO 14001) standards. 8 Table of Contents These stringent standards are audited and certified by third-party auditors in addition to our continuous 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 continuous internal self-audits.
We operate wafer fabrication facilities for the production of BAW, GaN, GaAs, SAW and TC-SAW wafers in North Carolina, Oregon and Texas. We also use multiple silicon-based process technologies, including SOI, SiGe and bulk CMOS, which are principally sourced from leading silicon foundries located throughout the world. We have a global supply chain and ship millions of units per day.
We operate fabrication facilities for the production of BAW, GaN, GaAs, SAW and Temperature Compensated SAW wafers in North Carolina, Oregon and Texas. We also use multiple silicon-based process technologies, including SOI, SiGe and bulk CMOS, which are principally sourced from leading silicon foundries located throughout the world.
We have our own flip chip, wire bond and wafer-level packaging ("WLP") technologies. We primarily use internal assembly facilities in China, Costa Rica, Germany and the U.S., and we also use external suppliers for these and other packaging technologies.
We have a global supply chain and ship millions of units per day. We have our own flip chip, wire bond and wafer-level packaging technologies. We primarily use internal assembly facilities in China, Costa Rica, Germany and the U.S., and we also use external suppliers for these and other packaging technologies.
We also continue to acquire patents through acquisitions or direct prosecution efforts and engage in licensing transactions to secure the right to use third-parties’ patents.
We have approximately 2,200 patents that expire from 2022 to 2041. We also continue to acquire patents through acquisitions or direct prosecution efforts and engage in licensing transactions to secure the right to use third-parties’ patents.
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 sales and customer support centers are located near our customers throughout the world. 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.
We also invest in large scale module assembly and test capabilities to bring these technologies to market in very high volumes. Raw Materials We purchase numerous raw materials, passive components and substrates for our products and manufacturing processes. In our GaN and GaAs manufacturing operations, we use several raw materials, including GaN on silicon carbide wafers and GaAs wafers.
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.
Government regulations are subject to change in the future, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business, results of operations or financial condition.
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.
Employees are equipped with the knowledge and capabilities to welcome and embrace diversity and advocate for inclusion. Through employee-driven groups called Qorvo Employee Networks, our employees have an opportunity to connect through shared interests and goals, and spur growth through professional and personal development. These and other efforts help foster an inclusive workplace of talented employees and drive employee engagement.
Diversity and inclusion principles are threaded across the entire company, and employees are equipped with the knowledge and capabilities to welcome and embrace diversity and advocate for inclusion. Through employee-driven groups called Qorvo Employee Networks, our employees have an opportunity to connect through shared interests and goals and spur growth through professional and personal development.
Customers We design, develop, manufacture and market products for leading U.S. and international OEMs and original design manufacturers ("ODMs"). We also collaborate with leading reference design partners. We provide products to our largest end customer, Apple Inc.
We require that all of our key vendors and suppliers be compliant with applicable standards. 8 Table of Contents Customers We design, develop, manufacture and market products for leading U.S. and international OEMs and original design manufacturers ("ODMs"). We also collaborate with leading reference design partners. We provide products to our largest end customer, Apple Inc.
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. During fiscal 2021, the semiconductor industry experienced supply constraints for certain items, including capacitors, laminates and silicon.
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.
Our products manage voltages from 1.8V to 600V and power up to 4,000 watts. Research and Development We invest in research and development ("R&D") to develop advanced technologies and products necessary to serve our markets. Our R&D activities typically support large competitive design win opportunities for major programs at key customers, which require best-in-class performance, size, cost and functional density.
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 competitive design win opportunities for major programs at key customers, which require best-in-class performance, size, cost and functional density. We also invest in R&D to develop new products for broader market applications.
We maintain close relationships with our customers and platform providers and provide them strong technical support to help anticipate future product needs and enhance their customer experience. Seasonality Our sales are the result of standard purchase orders or specific agreements with customers.
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.
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 3, 2021, we had approximately 8,400 employees and approximately 700 temporary employees in 21 countries.
We strive to meet these objectives by offering competitive pay and benefits in a diverse, inclusive and safe workplace and by providing opportunities for our employees to grow and develop their careers. As of April 2, 2022, we employed over 8,900 full and part-time employees in 22 countries.
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, and health and wellness benefits and programs.
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.
In defense and aerospace applications, the trend toward phased array radar, the shift to higher frequencies and the sharing of existing frequency bands with cellular communications are each expanding the demand for Qorvo’s high-performance defense RF technologies and solutions.
The trend toward phased array radar, the shift to higher frequencies and the sharing of existing frequency bands with cellular communications are expanding the content opportunity for Qorvo’s high-performance defense RF technologies and solutions. We are a leading supplier of RF products and compound semiconductor foundry services to defense primes and other global defense and aerospace customers.
We also help develop and qualify technologies in cooperation with key suppliers, 7 Table of Contents including SOI and microelectromechanical system ("MEMS") technology for switches and tuners, silicon germanium ("SiGe") for amplifiers, and bulk complementary metal oxide semiconductor ("CMOS") for power management devices and SoC solutions.
We also source technologies in cooperation with key suppliers, including silicon on insulator ("SOI") for switches and tuners, silicon germanium ("SiGe") for amplifiers, complementary metal oxide semiconductor ("CMOS") for power management devices and SoC solutions, MEMS technology for switches and force-sensing and SiC for high voltage power conversion devices.
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.
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.
We also invest in R&D to develop new products for broader market applications. Our R&D efforts require us to focus on both continuous improvement and innovation in fundamental areas including materials, software, semiconductor process technologies, simulation and modeling, systems architecture, circuit design, device packaging, module integration and test.
Our R&D efforts require us to focus on both continuous improvement and innovation in fundamental areas including materials, software, semiconductor process technologies, simulation and modeling, systems architecture, circuit design, device packaging, module integration and test. We have developed multiple generations of GaAs, GaN, BAW and surface acoustic wave ("SAW") process technologies that we manufacture.
Our design expertise and manufacturing capabilities span multiple semiconductor process technologies. Our primary wafer fabrication facilities are in North Carolina, Oregon and Texas, and our primary assembly and test facilities are in China, Costa Rica, Germany and Texas. We also source products and materials through external suppliers.
Our primary assembly and test facilities are in China, Costa Rica, Germany and Texas. We also source products and materials through external suppliers.
We maintain an internal sales and marketing organization that is responsible for key account management, application engineering support for customers, sales and advertising literature, and technical presentations for industry conferences. Our sales and customer support centers are located near our customers throughout the world.
We provide ongoing educational training about our products to our internal and external sales representatives and distributors. We maintain an internal sales and marketing organization that is responsible for key account management, application engineering support for customers, sales and advertising literature, and technical presentations for industry conferences.
We have design, sales and other manufacturing facilities throughout Asia, Europe and North America. We have two reportable segments: Mobile Products ("MP") and Infrastructure and Defense Products ("IDP"). MP is a global supplier of cellular, Ultra Wideband 802.15.4z ("UWB") and Wi-Fi solutions for a variety of applications, including smartphones, wearables, laptops, tablets and Internet of Things ("IoT").
MP is a global supplier of cellular, ultra-wideband 802.15.4z ("UWB"), Wi-Fi and other wireless solutions for a variety of applications, including smartphones, wearables, laptops, tablets and the Internet of Things ("IoT").
We also invest in employee development programs to provide employees with the training and education they need to help achieve their career goals, build relevant skills, and lead their organizations. We believe our competitive compensation and benefit programs, along with career growth and development opportunities offered by us, promote longer employee tenure and reduce turnover.
We offer e-learning libraries and on-demand training that provide our employees with real-time learning opportunities to help them achieve their career goals, build management skills and lead their organizations. We believe our competitive compensation and benefits programs, along with career growth and development opportunities promote longer employee tenure and reduce turnover.
In Wi-Fi, network and device OEMs are migrating to next-generation standards, Wi-Fi 6 and 6E, to support the higher wireless data demand, while the new standards are enabling new IoT use cases. The U.S. Federal Communications Commission approved the use of 5.9 GHz to 7.1 GHz for Wi-Fi 6E, and additional countries are making spectrum available for Wi-Fi 6E.
In the U.S., the Federal Communications Commission approved the use of 5.9 GHz to 7.1 GHz spectrum for Wi-Fi 6E, and countries outside the U.S. are also making spectrum available for Wi-Fi 6E.
Such efforts can be difficult because of the absence of consistent international standards and laws. Moreover, we respect the IP rights of others and have implemented policies and procedures to mitigate the risk of infringing or misappropriating third-party IP. Patent applications are filed within the U.S. and in other countries where we have a market presence.
We respect the IP rights of others and have implemented policies and procedures to mitigate the risk of infringing or misappropriating third-party IP. Patent applications are filed within the U.S. and in other countries where we have a market presence. On occasion, some applications do not mature into patents for various reasons, including rejections based on prior art.
AS 9100 is the standardized quality management system for the aerospace industry. ISO 14001 is an internationally agreed upon standard for an environmental management system. We require that all of our key vendors and suppliers be compliant with select standards, as applicable.
AS 9100 is the standardized quality management system for the aerospace industry. ISO 14001 is an internationally agreed upon standard for an environmental management system.
We select our domestic and foreign sales representatives based on technical skills and sales experience, the presence of complementary product lines and the customer base served. We provide ongoing educational training about our products to our internal and external sales representatives and distributors.
Sales and Marketing We sell our products worldwide both directly to customers and through a network of U.S. and foreign sales representative firms and distributors. We select our sales representatives based on technical skills and sales experience, the presence of complementary product lines and the customer base served.
We monitor employee turnover rates as our success depends upon retaining and investing in our highly skilled manufacturing and technical staff. Our global attrition rate has consistently been below the technology industry average.
We monitor employee turnover rates as our success depends upon retaining and investing in our worldwide talent. Our global attrition rate has consistently been below the technology industry average. Diversity, Equity and Inclusion At Qorvo, we value diversity, equity and inclusion and respect the unique talents, experiences, cultures and ideas of our global team members.
("Apple"), through sales to multiple contract manufacturers, which in the aggregate accounted for 30% and 33% of total revenue in fiscal years 2021 and 2020, respectively. Huawei Technologies Co., Ltd. and affiliates ("Huawei") accounted for less than 5% of total revenue in fiscal 2021 and 10% of total revenue in fiscal 2020.
("Apple"), through sales to multiple contract manufacturers, which in the aggregate accounted for 33% and 30% of total revenue in fiscal years 2022 and 2021, respectively. Samsung Electronics Co., Ltd. ("Samsung") accounted for 11% and 7% of total revenue in fiscal years 2022 and 2021, respectively. These customers primarily purchase RF solutions for a variety of mobile devices.
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 invest in these technologies to improve device performance, reduce die size and reduce manufacturing costs.
In response to the COVID-19 pandemic, we reduced business travel and instituted comprehensive safety protocols for all Qorvo facilities. We successfully transitioned a significant number of our employees to work from home and we invested in additional wellness benefits, including reimbursement programs to help employees improve home workspaces. As always, we prioritize safe working conditions.
We successfully transitioned a considerable number of our employees to work from home, and we invested in additional wellness benefits, including reimbursement programs to help employees improve home workspaces. In fiscal 2022, we achieved our safety goal for the fourth consecutive year, while providing a safe working environment for our many essential workers on-site through the COVID-19 pandemic.
We have included our website address as a factual reference and do not intend it as an active link to our website. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
The SEC maintains a website at https://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
We believe that costs arising from existing environmental laws will not have a material adverse effect on our financial position or results of operations. We are an ISO 14001:2015 certified manufacturer with a comprehensive Environmental Management System ("EMS") in place to help ensure control of the environmental aspects of the manufacturing process.
We are an ISO 14001:2015 certified manufacturer with a comprehensive Environmental Management System ("EMS") in place to help ensure control of the environmental aspects of the manufacturing process. Our EMS mandates compliance and establishes appropriate checks and balances to minimize the potential for non-compliance with environmental laws and regulations.
In some cases, our competitors are also our customers or suppliers. Additionally, many of our competitors may have significant financial, technical, manufacturing and marketing resources, which may allow them to more quickly implement new technologies and develop new products.
Additionally, many of our competitors may have significant financial, technical, manufacturing and marketing resources, which may allow them to more quickly implement new technologies and develop new products. 9 Table of Contents 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.
Government Regulations By virtue of operating our wafer fabrication facilities, 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 use, storage, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in the manufacturing process.
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 safety; and other activities affecting the environment, our workforce, and the management of our manufacturing operations.
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. 9 Table of Contents MP competes primarily with Broadcom Inc.; Murata Manufacturing Co., Ltd.; NXP Semiconductors N.V.; Qualcomm Technologies, Inc.; and Skyworks Solutions, Inc.
MP competes primarily with Broadcom Inc.; Murata Manufacturing Co., Ltd.; NXP Semiconductors N.V.; Qualcomm Technologies, Inc.; and Skyworks Solutions, Inc.
To augment the SoC, we also offer various configurations of advanced filtering and amplification as well as Wi-Fi 6 FEMs. Automotive We provide a variety of automotive RF connectivity products, including BAW filters, LNAs, switches, PAs and front end solutions. We also supply UWB SoC solutions.
We provide a variety of automotive RF connectivity products, including BAW filters, LNAs, switches, PAs and front-end solutions as well as UWB SoC solutions. Our products meet or exceed automotive AEC-Q100 quality and reliability standards, and our customers include the leading automotive OEMs, tier-1 suppliers and chipset vendors.
Markets Our business is diversified primarily across the following end markets: mobile devices; cellular base stations; defense and aerospace; Wi-Fi customer premises equipment; smart home; automotive; power management; and other markets. Mobile Devices Our largest market, mobile devices, includes smartphones, wearables, laptops, tablets and other devices.
These trends support multiyear technology upgrade cycles in our markets and increase the demand for our technologies and products. Our business is diversified primarily across the following end markets: mobile devices, cellular base stations, power management and conversion, wireless connectivity, defense and aerospace, automotive connectivity and other markets.
We are committed to an injury free workplace and provide dedicated workplace training and leadership support to reduce or eliminate health and safety risks. In fiscal 2021, we achieved a declining injury rate for the third consecutive year and recorded our lowest injury rate in Qorvo's history.
We prioritize safe working conditions for our employees as well as our on-site contractors and visitors. We are committed to an injury-free workplace and provide dedicated workplace training and leadership support to reduce or eliminate health and safety risks. In response to the COVID-19 pandemic, we instituted comprehensive safety protocols for all Qorvo facilities.
We have established relationships with professional associations and industry groups to proactively attract talent, and we partner with universities to recruit undergraduate and graduate students for our internship program and entry level positions.
We have established relationships with professional associations and industry groups to proactively attract talent, and we partner with universities for our internship program. We believe that our commitment to our internship program and university partnerships contributes to developing the next generation of talent, including engineers in our industry, and provides a pipeline of recent college graduates into our talent pool.
IDP competes primarily with Analog Devices, Inc.; Cree, Inc.; MACOM Technology Solutions Inc.; NXP Semiconductors N.V.; Silicon Laboratories Inc.; Skyworks Solutions, Inc.; STMicroelectronics N.V.; and Sumitomo Electric Device Innovations. Many of our current and potential competitors have entrenched market positions and customer relationships, established patents and other IP and substantial technological capabilities.
IDP competes primarily with Analog Devices, Inc.; Broadcom Inc.; Infineon Technologies AG; MACOM Technology Solutions Inc.; Murata Manufacturing Co., Ltd.; Nordic Semiconductor; NXP Semiconductors N.V.; ON Semiconductor Corporation; Qualcomm Technologies, Inc.; Silicon Laboratories Inc.; Skyworks Solutions, Inc.; STMicroelectronics N.V.; Sumitomo Electric Device Innovations; and Wolfspeed, Inc.
Historically, we have experienced seasonal fluctuations in the sale of mobile products, with revenue typically strongest in our second and third fiscal quarters. Competition We operate in a competitive industry generally characterized by rapid advances in technology and new product introductions.
Other factors such as macroeconomic effects and the timing of the next generation of technologies can also impact the fluctuations in demand. Competition We operate in a competitive industry generally characterized by rapid advances in technology and new product introductions.
These new use cases require complex RF solutions spanning multiple protocols, including GPS, satellite radio, Long-Term Evolution ("LTE"), Wi-Fi, 5G (sub-7 GHz and millimeter wave) and UWB. In automotive applications, UWB enables more secure access than current technologies. Power Management Power efficiency is a core requirement in all electronics.
These new use cases require complex RF solutions supporting a range of wireless technologies, including cellular, Wi-Fi, GPS, satellite radio and UWB. UWB enables more secure access than current technologies, helping to prevent so-called "man-in-the-middle" or "relay" attacks.
Defense and Aerospace Our products for defense radar applications bring new detection capabilities to help sense, communicate and protect. Our power amplifiers support phased array radars and communication systems, and our premium filters enable interference-free connections and optimize frequency spectrum to expand network capacity and extend coverage.
We also engage directly with defense customers to develop next-generation semiconductor and packaging technologies. Our power amplifiers support phased array radars and communication systems. Our solid-state, high-power products provide highly reliable, efficient broadband solutions for complex applications across a broad frequency spectrum. Our premium filters optimize frequency spectrum to expand network capacity and extend coverage.
We have developed specific restrictions on the content of certain hazardous materials in our products, as well as those of our suppliers and outsourced manufacturers and subcontractors. This helps to ensure that our products are compliant with the requirements of the markets into which the products will be sold and with our customers’ requirements.
We believe that our operations and facilities comply in all material respects with applicable environmental 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.
Competitive Pay and Benefits We provide compensation and benefit packages that we believe are competitive within the applicable market.
By region, approximately 57% of our total employees were in the Americas, 37% in Asia and 6% in Europe. Approximately 60% of our global population was in engineering or technician roles. Competitive Pay and Benefits We provide compensation and benefits packages that we believe are competitive within the applicable market.
ITEM 1. BUSINESS. Company Overview Qorvo ® is a leader in the development and commercialization of technologies and products for wireless and wired connectivity. We combine highly differentiated technologies, systems-level expertise and manufacturing scale to serve a diverse set of customers a broad portfolio of innovative solutions that enable a more connected world.
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. We have two reportable segments: Mobile Products ("MP") and Infrastructure and Defense Products ("IDP").
Cellular Base Stations Our integrated solutions for massive MIMO systems include switch-LNA modules, variable gain amplifiers, discrete PAs and integrated PA Doherty modules. Our GaAs and SOI solutions offer differentiated low noise performance, while our GaN PAs target higher frequency bands and combine high linearity and efficiency with low power consumption.
Qorvo supports the world’s leading cellular base station OEMs with a broad portfolio of infrastructure solutions to address requirements for increased data capacity and throughput and improved efficiency. Qorvo’s products for cellular base stations include switch-low noise amplifier ("LNA") modules, variable gain amplifiers, integrated power amplifier ("PA") Doherty modules, discrete LNAs and high power GaN amplifiers.
Manufacturers of smart home platforms prefer standards-agnostic, multi-protocol solutions that enable coexistence of multiple radios and deliver extended battery life in a compact form factor. Automotive Next-generation wireless technologies are enabling new use cases in automotive wireless connectivity, including vehicle-to-everything ("V2X") applications which facilitate direct, high-speed communication.
We also offer industry-leading standard products and integrated multi-chip modules such as LNAs, mixers, phase shifters, switches, multiplexers and attenuators. Automotive Connectivity The automotive industry continues to adopt advanced connectivity and compute technologies. Next-generation wireless technologies are enabling new use cases in automotive wireless connectivity, including vehicle-to-everything ("V2X") applications that enable direct, high-speed communication.
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Industry Trends Global demand for ubiquitous, always-on connectivity continues to increase, driving data traffic over wireless and wired networks. To keep pace with this demand, wireless and wired markets are undergoing multiyear technology upgrade cycles. Cellular operators are migrating to 5G to improve efficiency, increase data throughput, reduce signal latency and enable massive machine-to-machine connectivity.
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IDP is a global supplier of radio frequency ("RF"), system-on-a-chip ("SoC") and power management solutions for a wide range of markets, including cellular and IT infrastructure, automotive, renewable energy, defense and IoT.
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Because 5G networks operate on different frequencies (low-, mid-, and high-band spectrum) and because they coexist with prior cellular standards, 5G deployments are increasing the content opportunity for Qorvo's high-performance gallium nitride ("GaN"), gallium arsenide ("GaAs"), and bulk acoustic wave ("BAW") infrastructure RF products.
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We have design, sales and other manufacturing facilities throughout Asia, Europe and North America. 4 Table of Contents In addition to organic growth, our strategy may include the acquisition of businesses, assets and technologies that allow us to complement our existing product offerings and design capabilities to drive growth in new or existing markets.
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Smartphone original equipment manufacturers ("OEMs") are adopting 5G to reduce the total cost of the delivery of data (cost/bit), increase network throughput, enable more network devices or “nodes,” and enhance how users connect, communicate and transact business. 5G architectures are more complex than 4G architectures and can 4 Table of Contents include Multiple-Input/Multiple-Output (“MIMO”), transmit in the diversity path, higher frequencies with wider bandwidths and new receive paths featuring carrier aggregation (“CA”).
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During fiscal 2022, we acquired United Silicon Carbide, Inc. ("United SiC"), a provider of silicon carbide ("SiC") power products, and NextInput, Inc. ("NextInput"), a provider of microelectromechanical system ("MEMS")-based sensing products.
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The increased functionality is expected to add RF content and the added complexity favors best-in-class, highly integrated RF solutions. 5G smartphone units are forecast to approximately double in calendar year 2021.
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Industry Trends, Markets and Products Global demand for wireless and wired connectivity, supported by the proliferation of smarter, data-driven, connected devices in a variety of form factors, is increasing network data traffic and raising requirements for throughput and efficiency.
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Beyond smartphones, 5G enables new use cases in autonomous vehicles, augmented/virtual reality, and connected IoT devices powering smart homes and smart cities, which is increasing the content opportunity for Qorvo’s high-performance GaAs, silicon on insulator ("SOI"), and BAW cellular RF products.
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At the same time, global environmental initiatives and technology advancements related to energy efficiency, sustainability and conservation are driving investments across a range of consumer and industrial applications that demand maximum power efficiency, including in electric vehicles ("EVs") and renewable energy systems.
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The multiyear upgrade to Wi-Fi 6 and 6E and the addition of new use cases are increasing the content opportunity for Qorvo’s high-performance Wi-Fi RF solutions. In IoT, an expanding set of applications, from industrial equipment to wearable fitness trackers, are expected to comprise billions of connected intelligent devices that sense, process and communicate data.
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To solve our customers’ most critical RF and power-related challenges, our products enhance performance, improve efficiency, increase functionality, reduce complexity, enable smaller form factors and address other critical challenges. Mobile Devices Qorvo’s largest market is mobile devices, which is a global market characterized by large volumes. It includes smartphones, wearables, laptops, tablets and other devices.
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Given the diversity of applications and protocols, this is increasing the content opportunity for Qorvo’s multi-protocol (Bluetooth ® Low Energy, Zigbee and Thread) ultra-low power wireless solutions. Also, there is increasing demand for secure and accurate location and data communication services, and this is increasing the content opportunity for Qorvo’s high-performance UWB solutions.
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Advances in mobile devices have transformed how end users around the world access content, interact with their physical and virtual communities and transact commerce.
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This market is characterized by increasing demand for data throughput, the transition to 5G cellular technology and the proliferation of new communication and location-based services. There are three major use cases for 5G: enhanced mobile broadband, ultra-low latency, and massive machine-to-machine. Enhanced mobile broadband enables faster data speeds and greater capacity.
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Mobile devices are migrating to 5G architectures and technologies which increase data throughput, reduce signal latency and enable massive machine-to-machine connectivity. 5G devices operate over a wide range of frequencies and face challenges related to efficiency, linearity, signal coexistence, signal integrity and form factor. 5G architectures are more complex and include Multiple-Input/Multiple-Output ("MIMO"), secondary transmit, higher frequencies with wider bandwidths and new receive paths featuring carrier aggregation.
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Ultra-low latency enables real-time, mission critical applications, including autonomous driving, industrial robotics and remote medical care. Massive machine-to-machine enables billions of devices to connect on a single network, to sense, communicate and process on a scale not previously possible.
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In each instance, the increased functionality and greater complexity increase RF content and favor high performance and highly integrated solutions. Mobile device original equipment manufacturers ("OEMs") are adopting UWB technology to enhance functionality, including indoor navigation and secure remote access, leveraging UWB's precision-location accuracy.
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The transition to 5G involves advanced RF modulation across a wide range of frequency bands, including low-band, mid-band (“sub-7 GHz”) and high-band spectrum (millimeter wave). 5G architectures introduce a series of challenges related to coexistence, signal integrity, efficiency and system complexity. To address these challenges, mobile device manufacturers require best-in-class highly integrated RF solutions.
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They are also seeking to adopt force-sensing touch sensor technology to enhance human-machine touch interfaces, create new consumer experiences and advance industrial design. Qorvo’s products for mobile devices include highly integrated RF solutions which incorporate filters, switches, amplifiers, multiplexers and other components in a single package.
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Qorvo invests in semiconductor technology leadership, advanced packaging capabilities and systems-level expertise to provide customers high-performance discrete and highly integrated RF solutions that solve their most critical RF challenges.
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Our product portfolio also includes RF power management integrated circuits, UWB SoC and system-in-package ("SiP") solutions, MEMS-based sensors, antenna tuners, antennaplexers, as well as discrete multiplexers, duplexers, filters, and switches. Cellular Base Stations Operators of cellular base stations are migrating to 5G in order to increase capacity, expand coverage and lower the cost per bit of data delivered.
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To enable secure precision-location services, mobile devices are adopting UWB technology, given its superior location accuracy, reliability and security versus other short-range technologies. 5 Table of Contents Cellular Base Stations The cellular base station market is characterized by the deployment of 5G networks over sub-7 GHz and millimeter wave frequencies, often with massive MIMO active antenna arrays, which significantly increase the number of RF transmit and receive channels.
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This is enabling new data-driven intelligent applications that combine global hyper-connectivity with artificial intelligence and machine learning capabilities. New use cases include industrial automation, robotics, remote medical care, autonomous vehicles and augmented reality/virtual reality ("AR/VR"). 5G networks operate over a wide range of frequencies, and deployments can vary with spectrum allocation, regional demographics, geopolitical considerations and other factors.
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These 5G networks require a broad portfolio of highly efficient RF solutions that increase capacity and expand coverage in a compact form factor. Qorvo supports the world’s leading cellular base station OEMs with a broad portfolio of RF solutions serving all major/applicable frequency bands.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, financial condition or results of operations. 12 Table of Contents • Our operating results fluctuate and are substantially dependent on developing new products and achieving design wins as our industry’s product life cycles are short and our customers’ requirements change rapidly. • We depend on several large customers for a substantial portion of our revenue. • We face risks of a loss of revenue if contracts with the United States government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced. • The COVID-19 pandemic could materially adversely affect our financial condition and results of operations. • We depend heavily on third parties. • We face risks related to sales through distributors. • We face risks associated with the operation of our manufacturing facilities, and if we experience poor manufacturing yields, our operating results may suffer. • We are subject to inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products. • We sell certain of our products based on reference designs of platform providers, and our inability to effectively manage or maintain our evolving relationships with these companies may have an adverse effect on our business. • We are subject to risks from international sales and operations. • We may not be able to generate sufficient cash to service all of our debt, including our senior notes due 2029 and 2031, respectively, or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us. • Our acquisitions and other strategic investments could fail to achieve our financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. • In order to compete, we must attract, retain, and motivate key employees, and our failure to do so could harm our business and our results of operations. • We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties, and we may be subject to claims of infringement of third-party intellectual property rights. • Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer.
Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, financial condition or results of operations. • Our operating results fluctuate and are substantially dependent on developing new products and achieving design wins as our customers' requirements can change rapidly and product life cycles can be short. • 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 in customer demand, worldwide economies and financial markets resulting from the ongoing impact of the COVID-19 pandemic. • 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. 13 Table of Contents • 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. • We are subject to risks from international sales and operations. • We may not be able to generate sufficient cash to service all of our debt or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us. • 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. • In order to compete, we must attract, retain, and motivate key employees, and our failure to do so could harm our business and our results of operations. • We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties, and we may be subject to claims of infringement of third-party intellectual property rights. • Security breaches and other disruptions could compromise our proprietary information, expose us to liability or disrupt our ability to operate critical business functions, which would cause our business and reputation to suffer.
Any significant increase in our future effective tax rates could reduce net income for future periods. Changes in the favorable tax status of our subsidiaries in Singapore and Costa Rica would have an adverse impact on our operating results.
Any significant increase in our future effective tax rates could reduce net income for future periods. Changes in the favorable tax status of our subsidiaries in Costa Rica and Singapore would have an adverse impact on our operating results.
Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with the financial covenants contained in the Revolving Facility.
Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with the financial covenants contained in our revolving facility.
Risks Related to Information Technology and Data Privacy We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties. We rely on a combination of patents, trademarks, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights.
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 intellectual property rights.
Such actions in the future, as well as other changes in Chinese laws and regulations, including actions in furtherance of China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, foster the emergence of Chinese-based competitors, decrease the demand for our products in China, or reduce the supply of critical materials for our products, which could have a material adverse effect on our business and results of operations.
Such actions in the future, as well as other changes in Chinese laws and regulations, including actions in furtherance of China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, foster the emergence of Chinese-based competitors, decrease the demand for our products in China and reduce the supply of critical materials for our products, which could have a material adverse effect on our business and results of operations.
Legislative changes, interpretations and guidance, and changes in prior tax rulings and decisions by tax authorities regarding treatments and positions of corporate income taxes resulting from these initiatives, could increase our effective tax rate and result in taxes we previously paid being subject to change, which may adversely impact our financial position and results of operations.
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 subject to change, which may adversely impact our financial position and results of operations.
Many of our existing and potential competitors may have greater financial, technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors. Industry overcapacity could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance.
Many of our existing and potential competitors may have greater financial, technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors. Overcapacity could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance.
Our effective tax rate is subject to fluctuations and impacted by a number of factors, 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 in expenses not deductible for tax purposes; • changes in available tax credits; and 21 Table of Contents • changes in tax laws, domestic and foreign, or the interpretation of such tax laws, and changes in generally accepted accounting principles.
Our effective tax rate is subject to fluctuations and impacted by a number of factors, 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; 22 Table of Contents • changes in expenses not deductible for tax purposes; • 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.
These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the markets in which we compete. In addition, the 2020 Credit Agreement requires us to comply with certain financial maintenance covenants.
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 certain financial maintenance covenants.
Costs of product defects and deviations from required specifications include the following: • writing off inventory; • scrapping products that cannot be fixed; • accepting returns of products that have been shipped; • providing product replacements at no charge; • reimbursement of direct and indirect costs incurred by our customers in recalling or reworking their 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.
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 by our customers in recalling or reworking their 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.
The number of usable products that result from our production process can fluctuate as a result of many factors, including: • design errors; 17 Table of Contents • defects in photomasks (which are used to print circuits on a wafer); • minute impurities and variations in materials used; • contamination of the manufacturing environment; • equipment failure or variations in the manufacturing processes; • losses from broken wafers or other human error; and • defects in substrates and packaging.
The number of usable products that result from our production process can fluctuate as a result of many factors, including: • design errors; 18 Table of Contents • defects in photomasks (which are used to print circuits on a wafer); • minute impurities and variations in materials used; • contamination of the manufacturing environment; • equipment failure or variations in the manufacturing processes; • losses from broken wafers or other human error; and • defects in substrates and packaging.
Our subsidiaries in Singapore and Costa Rica have been granted tax holidays that minimize our tax expense and that are expected to be effective through December 2021 and December 2027, respectively. In their efforts to deal with budget deficits, governments around the world are focusing on increasing tax revenues through increased audits and, potentially, increased tax rates for corporations.
Our subsidiaries in Costa Rica and Singapore have been granted tax holidays that minimize our tax expense and that are expected to be effective through December 2027 and December 2031, respectively. In their efforts to deal with budget deficits, governments around the world are focusing on increasing tax revenues through increased audits and, potentially, increased tax rates for corporations.
Our successful product 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; • our ability to design products that meet our customers’ cost, size and performance requirements; • our ability to introduce new products that are competitive and can be manufactured at lower costs or that command higher prices based on superior performance; • acceptance of our new product designs; • the availability of qualified product design engineers; • our timely completion of product designs and ramp up of new products according to our customers’ needs with acceptable manufacturing yields; and 14 Table of Contents • market acceptance of our customers’ products and the duration of the life cycle of such products.
Our successful product 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; • our ability to design products that meet our customers’ cost, size and performance requirements; • our ability to introduce new products that are competitive and can be manufactured at lower costs or that command higher prices based on superior performance; • acceptance of our new product designs; • the availability of qualified product design engineers; • our timely completion of product designs and ramp up of new products according to our customers’ needs with acceptable manufacturing yields; and • market acceptance of our customers’ products and the duration of the life cycle of such products.
The costs related to cyber-attacks or other security threats or computer systems disruptions typically would not be fully insured or indemnified by others. Occurrence of any of the events described above could result in loss of competitive advantages derived from our R&D efforts or our IP.
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.
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.
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.
A number of factors related to our facilities will affect our business and financial results, including the following: • our ability to adjust production capacity in a timely fashion in response to changes in demand for our products; • the significant fixed costs of operating the facilities; • factory utilization rates; 16 Table of Contents • our ability to qualify our facilities for new products and new technologies in a timely manner; • the availability of raw materials, the impact of the volatility of commodity pricing and tariffs imposed on raw materials, including substrates, gold, platinum and high purity source materials such as gallium, aluminum, arsenic, indium, silicon, phosphorous and palladium; • our manufacturing cycle times; • our manufacturing yields; • the political, regulatory and economic risks associated with our international manufacturing operations; • potential violations by our international employees or third-party agents of international or U.S. laws relevant to foreign operations; • our ability to hire, train and manage qualified production personnel; • our compliance with applicable environmental and other laws and regulations; and • our ability to avoid prolonged periods of down-time in our facilities for any reason.
A number of factors related to our facilities will affect our business and financial results, including the following: • our ability to adjust production capacity in a timely fashion in response to changes in demand for our products; • the significant fixed costs of operating the facilities; • factory utilization rates; • our ability to qualify our facilities for new products and new technologies in a timely manner; 17 Table of Contents • the availability of raw materials, the impact of the volatility of commodity pricing and tariffs imposed on raw materials, including substrates, gold, platinum and high purity source materials such as gallium, aluminum, arsenic, indium, silicon, phosphorous and palladium; • our manufacturing cycle times; • our manufacturing yields; • the political, regulatory and economic risks associated with our international manufacturing operations; • potential violations by our international employees or third-party agents of international or U.S. laws relevant to foreign operations; • our ability to hire, train and manage qualified production personnel; • our compliance with applicable environmental and other laws and regulations; and • our ability to avoid prolonged periods of down-time in our facilities for any reason, including but not limited to, COVID-19.
The Credit Agreement governing the Revolving Facility and the Term Loan and the Indentures governing the Notes contain a number of significant restrictions and covenants that limit our ability to: • incur additional debt; • pay dividends, make other distributions or repurchase or redeem our capital stock; • prepay, redeem or repurchase certain debt; • make loans and investments; • sell, transfer or otherwise dispose of assets; • incur or permit to exist certain liens; • enter into certain types of transactions with affiliates; 25 Table of Contents • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, amalgamate, merge or sell all or substantially all of our assets.
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 other distributions or repurchase or redeem our capital stock; • prepay, redeem or repurchase certain debt; • make loans and investments; • sell, transfer or otherwise dispose of assets; • incur or permit to exist certain liens; • enter into certain types of transactions with affiliates; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, amalgamate, merge or sell all or substantially all of our assets.
The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers.
The spread of COVID-19 caused us to modify our business practices (including employee travel, employee work locations, and cancellation of events and conferences), and we may reinstitute these and take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers.
Any of these risks could have a material adverse effect on our business, results of operations, financial condition, or cash flows, particularly in the case of a large acquisition. 20 Table of Contents 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.
Any of these risks could have a material adverse effect on our business, results of operations, financial condition, or cash flows, particularly in the case of a large acquisition. 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.
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.
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 21 Table of Contents help us achieve our financial or strategic objectives.
The loss of foreign customers or suppliers or the imposition of restrictions on our ability to sell or transfer products to such customers or suppliers as a result of tariffs, export 24 Table of Contents restrictions or other U.S. regulatory actions could materially adversely affect our sales, business and results of operations.
The loss of foreign customers or suppliers or the imposition of restrictions on our ability to sell or transfer products to such customers or suppliers as a result of tariffs, export restrictions or other U.S. regulatory actions could materially adversely affect our sales, business and results of operations.
This market dynamic has evolved as platform providers have worked to develop more fully integrated solutions that include their own RF technologies and components. Platform providers may be in a different business from ours or we may be their customer or direct competitor. Accordingly, we must balance our interest in obtaining new business with competitive and other factors.
This market dynamic has evolved as chipset suppliers have worked to develop more fully integrated solutions that include their own RF technologies and components. 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.
This requires us to work more closely with OEMs and ODMs to secure the design of our products in their handsets and other devices. Our relationships with platform providers are complex and evolving, and the inability to effectively manage or maintain these relationships could have an adverse effect on our business, financial condition and results of operations.
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.
Because platform providers control the overall system reference design, if they offer competitive RF technologies or their own RF solutions as a part of their reference design and exclude our products from the design, we are at a distinct competitive disadvantage with OEMs and ODMs that are seeking a turn-key design solution, even if our products offer superior performance.
Because chipset suppliers control the overall system reference design, if they offer competitive RF technologies or their own RF solutions as a part of their reference design and exclude our products from the design, we are at a distinct competitive disadvantage with OEMs and ODMs that are seeking a turn-key design solution, even if our products offer superior performance.
Like others, we are also subject to significant system or network disruptions from numerous causes, including computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. Security breaches, computer malware, phishing, spoofing, and other cyber-attacks have become more prevalent and sophisticated in recent years.
Like others, we are also subject to significant system or network disruptions from numerous causes, including computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. 27 Table of Contents Security breaches, computer malware, phishing, spoofing, and other cyber-attacks have become more prevalent and sophisticated in recent years.
In addition, the General Corporation Law of the State of Delaware contains provisions that regulate “business combinations” between corporations and interested stockholders who own 15% or more of the corporation’s voting stock, except under certain circumstances. These provisions could also discourage potential acquisition proposals and delay or prevent a change in control.
In addition, the General Corporation Law of the State of Delaware contains provisions that regulate "business combinations" between corporations and interested stockholders who own 15% or more of the corporation’s voting stock, except under certain circumstances. These provisions could also discourage potential acquisition proposals and delay or prevent a change in control.
Our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.
Our operating results have been and our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.
We depend on several large customers for a substantial portion of our revenue. A substantial portion of our MP revenue is currently from several large customers. Our future operating results will be affected by both the success of our largest customers and on our success in diversifying our products and customer base.
A substantial portion of our MP revenue is currently from several large customers. Our future operating results will be affected by both the success of our largest customers and on our success in diversifying our products and customer base.
Our ability to make scheduled payments on or to refinance our debt obligations, including the 2020 Term Loan and the Notes, and to fund working capital, planned capital expenditures and expansion efforts and any strategic alliances or acquisitions we may make in the future depends on our ability to generate cash in the future and on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
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.
Additionally, the 2020 Credit Agreement and the Indentures limit the use of the proceeds from any disposition; as a result, we may not be allowed under these documents to use proceeds from such dispositions to satisfy our debt service obligations.
Additionally, our credit agreement and the indentures governing our senior notes limit the use of the proceeds from any disposition; as a result, we may not be allowed under these documents to use proceeds from such dispositions to satisfy our debt service obligations.
Our operating results are substantially dependent on developing new products and achieving design wins as our industry’s product life cycles are short and our customers’ requirements change rapidly.
Our 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.
We are subject to risks associated with environmental, health and safety regulations and climate change. We are subject to a broad array of U.S. and foreign environmental, health and safety laws and regulations.
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.
For example, to address manufacturing overcapacity, in the third quarter of fiscal 2019 we commenced a phased closure of a SAW filter manufacturing facility in Florida and a transfer of production to our North Carolina facility, which was completed in fiscal 2020. In 19 Table of Contents Texas, we have temporarily idled a BAW manufacturing facility.
For example, to address manufacturing overcapacity, in the third quarter of fiscal 2019 we commenced a phased closure of a SAW filter manufacturing facility in Florida and a transfer of production to our North Carolina facility, which was completed in fiscal 2020. In fiscal 2021, we temporarily idled a BAW manufacturing facility in Texas.
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.
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.
Some of the factors that could cause fluctuations in the stock price or trading volume of our common stock include: • general market and economic and political conditions, including market conditions in the semiconductor industry; • actual or expected variations in quarterly operating results; • pandemics and similar major health concerns, including the COVID-19 pandemic; • differences between actual operating results and those expected by investors and analysts; • changes in recommendations by securities analysts; • operations and stock performance of competitors and major customers; • accounting charges, including charges relating to the impairment of goodwill and restructuring; • significant acquisitions, strategic alliances, capital commitments, or new products announced by us or by our competitors; • sales of our common stock, including sales by our directors and officers or significant investors; • repurchases of our common stock; 28 Table of Contents • recruitment or departure of key personnel; and • loss of key customers.
Some of the factors that could cause fluctuations in the stock price or trading volume of our common stock include: • general market and economic and political conditions, including market conditions in the semiconductor industry; • actual or expected variations in quarterly operating results; • pandemics and similar major health concerns, including the COVID-19 pandemic; • differences between actual operating results and those expected by investors and analysts; • changes in recommendations by securities analysts; • operations and stock performance of competitors and major customers; • accounting charges, including charges relating to the impairment of goodwill and restructuring; 29 Table of Contents • 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.
In 2017, 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 2017, 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.
Moreover, these events may result in the early obsolescence of our products, product development delays, or diversion of the attention of management and key information technology and other resources, or otherwise adversely affect our internal operations and reputation or degrade our financial results and stock price.
Moreover, these events may result in the early obsolescence of our products, product development delays, or diversion of the attention of management and key information technology and other resources, or otherwise adversely affect our internal operations and reputation.
Sales to customers located outside the U.S. accounted for approximately 59% of our revenue in fiscal 2021, of which approximately 39% was attributable to sales to customers located in China. We expect that revenue from international sales to China and other markets will continue to be a significant part of our total revenue.
Sales to customers located outside the U.S. accounted for approximately 58% of our revenue in fiscal 2022, of which approximately 32% was attributable to sales to customers located in China. We expect that revenue from international sales to China and other markets will continue to be a significant part of our total revenue.
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.
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.
Various jurisdictions are developing other climate change-based regulations that also may increase our expenses and adversely affect our operating results. We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations may adversely affect our business and results of operations.
Various jurisdictions are developing other climate change-based regulations that also may increase our expenses and adversely affect our operating results. We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations, as well as meeting related customer and investor expectations, may adversely affect our business and results of operations.
Collectively, our two largest end customers accounted for an aggregate of approximately 39%, 43% and 47% of our revenue for fiscal years 2021, 2020 and 2019, respectively.
Collectively, our two largest end customers accounted for an aggregate of approximately 44%, 39% and 43% of our revenue for fiscal years 2022, 2021 and 2020, respectively.
We cannot assure that the price of our common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that are unrelated to our performance. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
We cannot assure that the price of our common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that are unrelated to our performance.
Risks Related to Our Indebtedness We may not be able to generate sufficient cash to service all of our debt, including our senior notes due 2029 and 2031, respectively, or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us.
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 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.
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.
Platform providers historically looked to us and our competitors to provide RF products to their customers as part of the overall system design, and we competed with other RF companies to have our products included in the platform provider’s system reference design.
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.
If we violate covenants under the 2020 Credit Agreement and are unable to obtain a waiver from our lenders, our debt under the Revolving Facility would be in default and could be accelerated by our lenders.
If we violate covenants under our credit agreement and are unable to obtain a 26 Table of Contents waiver from our lenders, our debt under our revolving facility would be in default and could be accelerated by our lenders.
A platform provider may own or 18 Table of Contents control IP that gives it a strong market position for its baseband products for certain air interface standards, which provides it with significant influence and control over sales of RF products for these standards.
A chipset supplier may own or control IP that gives it a strong market position for its baseband products for certain air interface standards, which provides it with significant influence and control over sales of RF products for these standards.
In certain cases, these capacity additions exceeded the near-term demand requirements, leading to overcapacity situations and underutilization of our manufacturing facilities. As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenues experienced during periods of underutilization. Underutilization of our manufacturing facilities can adversely affect our gross margin and other operating results.
In certain cases, these capacity additions exceeded the near-term demand requirements, leading to overcapacity situations and underutilization of our manufacturing facilities. As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenues experienced during periods of underutilization.
Our worldwide operations and business could be disrupted by natural disasters, industrial accidents, cybersecurity incidents, telecommunications failures, power or water shortages, extreme weather conditions, public health issues (including the COVID-19 pandemic), military actions, acts of terrorism, political or regulatory issues and other man-made disasters or catastrophic events.
Our worldwide operations and business could be, and in some cases have been, disrupted by natural disasters, industrial accidents, 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.
Our failure to comply with any of these existing or future laws or regulations could result in: • regulatory penalties and fines; • legal liabilities, including financial responsibility for remedial measures if our properties are contaminated; • expenses to secure required permits and governmental approvals; • reputational damage; • suspension or curtailment of our manufacturing, assembly and test processes; and • increased costs to acquire pollution abatement or remediation equipment or to modify our equipment, facilities or manufacturing processes to bring them into compliance with applicable laws and regulations.
Our failure to comply with any of these existing or future laws or regulations could result in: • regulatory penalties and fines; • legal liabilities, including financial responsibility for remedial measures if our properties are contaminated; • expenses to secure required permits and governmental approvals; • reputational damage; • suspension or curtailment of our manufacturing, assembly and test processes; and • increased costs to acquire pollution abatement or remediation equipment or to modify our equipment, facilities or manufacturing processes to bring them into compliance with applicable laws and regulations. 23 Table of Contents 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.
As a result, we are subject to regulatory, geopolitical and other risks associated with doing business outside the U.S., including: • global and local economic, social and political conditions and uncertainty; • currency controls and fluctuations; • formal or informal imposition of export, import or doing-business regulations, including trade sanctions, tariffs and other related restrictions; • labor market conditions and workers’ rights affecting our manufacturing operations or those of our customers or suppliers; • disruptions in capital and securities and commodities trading markets; • occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability, which may disrupt manufacturing, assembly, logistics, security and communications and result in reduced demand for our products; • compliance with laws and regulations that differ among jurisdictions, including those covering taxes, intellectual property ownership and infringement, imports and exports, anti-corruption and anti-bribery, antitrust and competition, data privacy, and environment, health, and safety; and • pandemics and similar major health concerns, including COVID-19, which could adversely affect our business and our customer order patterns.
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 imposition of export, import or doing-business regulations, including trade sanctions, tariffs and other related restrictions; • labor market conditions and workers’ rights affecting our manufacturing operations or those of our customers or suppliers; • disruptions in capital and securities and commodities trading markets; • occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability such as the conflict 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, intellectual property ownership and infringement, imports and exports, anti-corruption and anti-bribery, antitrust and competition, data privacy, and environment, health, and safety; • 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 24 Table of Contents • pandemics and similar major health concerns, including COVID-19 and related mitigation actions (such as the recent lockdowns in China), which could adversely affect our business and our customer order patterns.
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 Chinese customers may have a material impact on our business, including our ability to sell products and to manufacture or source components. 23 Table of Contents As a global company, our results are affected by movements in currency exchange rates.
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 Chinese customers may have a material impact on our business, including our ability to sell products and to manufacture or source components.
Our future operating results will depend on many factors, including the following: 13 Table of Contents • business, political and macroeconomic changes, including trade restrictions and recession or slowing growth in the semiconductor industry and the overall global economy; • changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices; • fluctuations in demand for our customers’ products; • our ability to forecast our customers’ demand for our products accurately; • the ability of third-party foundries and other third-party suppliers to manufacture, assemble and test our products in a timely and cost-effective manner; • our customers’ and distributors’ ability to manage the inventory that they hold and to forecast accurately their demand for our products; • our ability to achieve cost savings and improve yields and margins on our new and existing products; • our ability to successfully integrate into our business, and realize the expected benefits of, our acquisitions and strategic investments; and • our ability to utilize our capacity efficiently or to acquire additional capacity in response to customer demand.
Our 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; • political and/or civil unrest, acts of war or other military actions, including any resulting sanctions or other restrictive actions; • changes in consumer confidence caused by many factors, including changes in interest rates, credit 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 products accurately; • the ability of third-party foundries and other third-party suppliers to manufacture, assemble and test our products and otherwise deliver on their commitments to us in a timely and cost-effective manner; • our customers’ and distributors’ ability to manage the inventory that they hold and to forecast accurately their demand for our products; • delays in the widespread deployment of commercial 5G networks or in consumer adoption of 5G-enabled devices; 14 Table of Contents • our ability to achieve cost savings and improve yields and margins on our new and existing products; • our ability to successfully integrate into our business, and realize the expected benefits of, our acquisitions and strategic investments; and • our ability to utilize our capacity efficiently or to acquire additional capacity in response to customer demand.
In addition, other countries are beginning to implement legislation and other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and action plan, which aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentations rules, and nexus-based tax incentive practices.
In addition, other countries are beginning to implement legislation and other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and action plan, which aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, nexus-based tax incentive practices, allocating greater taxing rights to countries where customers are located, and establishing a minimum tax on global income.
We cannot be sure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay our debt, including the 2020 Term Loan and the Notes.
We cannot be sure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay our debt.
Furthermore, even if our own operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a business disruption, natural disaster or catastrophic event, they may reduce or cancel their orders, which may adversely affect our results of operations. If we experience poor manufacturing yields, our operating results may suffer.
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.
Our products have unique designs and are fabricated using multiple semiconductor process technologies that are highly complex. In many cases, our products are assembled in customized packages. Many of our products consist of multiple components in a single module and feature enhanced levels of integration and complexity.
If we experience poor manufacturing yields, our operating results may suffer. Our products have unique designs and are fabricated using multiple process technologies that are highly complex. In many cases, our products are assembled in customized packages. Many of our products consist of multiple components in a single module and feature enhanced levels of integration and complexity.
Due to the complexity of our products, we periodically experience difficulties in achieving acceptable yields and other quality issues, particularly with respect to new products. Our customers test our products once they have been assembled into their products.
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.
We are subject to inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products. In order to ensure availability of our products for some of our largest end customers, we start manufacturing certain products in advance of receiving purchase orders based on forecasts provided by these customers.
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.
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.
Underutilization of our manufacturing facilities can adversely affect 20 Table of Contents our gross margin and other operating results. If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which would increase our expenses.
Because demand for our products may not materialize, or may be lower than expected, manufacturing based on forecasts subjects us to heightened risks of higher inventory carrying costs, increased obsolescence and higher operating costs.
See Note 11 of the Notes to Consolidated Financial Statements for additional information. Because demand for our products may not materialize, or may be lower than expected, purchasing materials and manufacturing based on forecasts subjects us to heightened risks of higher inventory carrying costs, increased obsolescence and higher operating costs.
Compliance with these policies 22 Table of Contents increases our operating expenses, and non-compliance can adversely affect customer relationships and harm our business.
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.
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.
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.
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. 27 Table of Contents 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.
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.
In addition, if one of our customers or another supplier to one of our customers were found to be infringing on third-party intellectual property rights, such a finding could adversely affect the demand for our products. Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer.
In addition, if one of our customers or another supplier to one of our customers were found to be infringing on third-party intellectual property rights, such a finding could adversely affect the demand for our products.
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 policies, which often include employment, health, safety, environmental and other requirements that exceed applicable legal requirements.
In addition, many of our largest end customers require us to comply with corporate social responsibility policies, which often include employment, health, safety, environmental and other requirements that exceed applicable legal requirements.
The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, product quality and fabrication costs. The semiconductor industry has experienced supply constraints for certain items, including capacitors, laminates and silicon.
The use of external suppliers involves a number of risks, including the possibility of material disruptions in the 16 Table of Contents supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, product quality and cost increases.
Travel bans, difficulties obtaining visas and other restrictions on international travel could make it more difficult to effectively manage our international operations, operate as a global company or service our international customer base.
In addition, existing or new immigration laws, policies or regulations in the U.S. may limit the pool of available talent. Travel bans, difficulties obtaining visas and other restrictions on international travel could make it more difficult to effectively manage our international operations, operate as a global company or service our international customer base.
We also design our computer systems and networks and implement various procedures to restrict unauthorized access to dissemination of our proprietary information. We face internal and external data security threats.
We protect this information by entering into confidentiality agreements with our employees, 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. We face internal and external data security threats.
We cannot predict what further actions may ultimately be taken with respect to tariffs 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.
In addition, our customers or suppliers affected by future U.S. government sanctions or threats of sanctions may respond by developing their own solutions to replace our products or by adopting our foreign competitors' solutions. 25 Table of Contents We cannot predict what further actions may ultimately be taken with respect to tariffs 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.
Reductions in defense and aerospace funding or the loss of a significant defense and aerospace program or contract would have a material adverse effect on our operating results. The COVID-19 pandemic could materially adversely affect our financial condition and results of operations.
Reductions in defense and aerospace funding or the loss of a significant defense and aerospace program or contract would have a material adverse effect on our operating results. We may be subject to continued volatility and uncertainty in customer demand, worldwide economies and financial markets resulting from the ongoing impact of the COVID-19 pandemic.
Even if such restrictions are lifted, any financial or other penalties or continuing export restrictions imposed on Huawei could have a continuing negative impact on our future revenue and results of operations.
The U.S. government has in the past imposed export restrictions that effectively banned American companies from exporting, reexporting, and transferring products to certain of our customers. If such restrictions are imposed again in the future and even if subsequently lifted, any financial or other penalties could have a continuing negative impact on our future revenue and results of operations.
If product demand decreases or we fail to forecast demand accurately, we could be required to write off inventory, which would have a negative impact on our gross margin and other operating results.
If product demand decreases or we fail to forecast demand accurately, we could be required to write off inventory, which would have a negative impact on our gross margin and other operating results. 19 Table of Contents 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.
Finally, even our inadvertent failure to comply with federal, state, or international privacy-related or data protection laws and regulations could result in audits, regulatory inquiries or proceedings against us by governmental entities or others.
Finally, even our inadvertent failure to comply with federal, state, or international privacy-related or data protection laws and regulations could result in audits, regulatory inquiries or proceedings against us by governmental entities or others. 28 Table of Contents 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.
There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed. 15 Table of Contents The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.
The degree to which COVID-19 and its variants impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, and the actions to contain the virus or immunize against or treat its impact. We depend heavily on third parties.
The competition for qualified personnel is intense, and the number of people with experience, particularly in RF engineering, software engineering, integrated circuit and filter 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.
We do not have employment agreements with the vast majority of our employees. We must also continue to attract qualified personnel. The competition for qualified personnel is intense, and the number of people with experience, particularly in RF engineering, software engineering, integrated circuit and filter design, and technical marketing and support, is limited.
If we experience any significant difficulty in obtaining the materials used in the conduct of our business, these supply challenges may limit our ability to fully satisfy the demand for some of our products.
Furthermore, the COVID-19 pandemic 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.
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 this information by entering into confidentiality agreements with our employees, consultants, strategic partners and other third 26 Table of Contents parties.
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 sell certain of our products based on reference designs of platform providers, and our inability to effectively manage or maintain our evolving relationships with these companies may have an adverse effect on our business. Platform providers are typically large companies that provide system reference designs for OEMs and ODMs that include the platform provider’s baseband and other complementary products.
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.
Removed
The COVID-19 pandemic has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−2 removed1 unchanged
Biggest changeWe 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.
Biggest changeWhile 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.
The following table sets forth our primary production facilities as of April 3, 2021: Location Owned/Leased Primary Function Greensboro, North Carolina Owned Wafer fabrication Hillsboro, Oregon Owned Wafer fabrication Richardson, Texas Owned Wafer fabrication, assembly and test Beijing, China (1) Owned Module assembly and test Dezhou, China Leased Module assembly and test Heredia, Costa Rica Owned Filter assembly and test Nuremberg, Germany Leased Packaging and test (1) We hold land-use rights for the land associated with this property.
The following table sets forth our primary production facilities as of April 2, 2022: Location Owned/Leased Primary Function Greensboro, North Carolina Owned Wafer fabrication Hillsboro, Oregon Owned Wafer fabrication Richardson, Texas Owned Wafer fabrication, assembly and test Beijing, China (1) Owned Module assembly and test Dezhou, China Leased Module assembly and test Heredia, Costa Rica Owned Module and filter assembly and test Nuremberg, Germany Leased Packaging and test (1) We hold land-use rights for the land associated with this property.
Removed
Our wafer fabrication facility (owned) in Farmers Branch, Texas, has been idled, and the wafer fabrication operations in our Apopka, Florida facility (owned) were consolidated into our Greensboro, North Carolina facility during fiscal 2020. The Apopka, Florida facility is currently used by Qorvo as a research and development center.
Added
In fiscal 2021, we temporarily idled a BAW manufacturing facility (owned) in Farmers Branch, Texas. We believe our properties have been well-maintained, are in sound operating condition and contain all equipment and facilities necessary to operate at present levels.
Removed
The majority of our production facilities are shared by our operating segments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+3 added−3 removed2 unchanged
Biggest changeThe index level for all series assumes that $100.00 was invested in our common stock and each index on April 2, 2016. B. The lines represent monthly index levels derived from compounded daily returns, assuming reinvestment of all dividends. C. The indexes are reweighted daily using the market capitalization on the previous trading day. D.
Biggest changeThe graph and table assume an initial investment of $100 was made on April 1, 2017 in each of our common stock and the indexes, reflecting compounded daily returns as well as reinvestment of all dividends. The indexes are reweighted daily using the market capitalization on the previous trading day.
Under this program, share repurchases were made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The number and timing of shares repurchased depended on general market conditions, regulatory requirements, alternative investment opportunities and other considerations.
Under this program, share repurchases are made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which we repurchase our shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory requirements, alternative investment opportunities and other considerations.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 29 Table of Contents Our common stock is traded on the Nasdaq Global Select Market under the symbol "QRVO." As of May 13, 2021, there were 659 holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization).
Our common stock is traded on the Nasdaq Global Select Market under the symbol "QRVO." As of May 13, 2022, there were 653 holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization).
The program did not require us to repurchase a minimum number of shares and did not have a fixed term. On May 5, 2021, we announced that our Board of Directors authorized a new share repurchase program. See Note 16 and Note 18 of the Notes to Consolidated Financial Statements for further discussion of our share repurchase program. ITEM 6.
The program does not require us to repurchase a minimum number of shares, does not have a fixed term, and may be modified, suspended or terminated at any time without prior notice. See Note 16 of the Notes to Consolidated Financial Statements for further discussion of our share repurchase program. ITEM 6. [RESERVED]
Removed
PERFORMANCE GRAPH April 2, 2016 April 1, 2017 March 31, 2018 March 30, 2019 March 28, 2020 April 3, 2021 Qorvo, Inc. $100.00 $134.91 $138.63 $141.15 $158.78 $379.57 Nasdaq Composite $100.00 $122.88 $148.39 $164.16 $165.30 $286.63 S&P 500 $100.00 $117.17 $133.57 $146.25 $136.05 $212.71 Nasdaq Electronic Components $100.00 $143.46 $196.39 $196.51 $205.57 $390.06 Notes: 30 Table of Contents A.
Added
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Removed
If the month end is not a trading day, the preceding trading day is used.
Added
The following graph and table compare the cumulative total shareholder return of our common stock, the S&P 500 Index, the Nasdaq Electronic Components Index (former industry index) and the S&P Semiconductors Index (new industry index), for the five years ended April 2, 2022. We believe the new industry index is more representative of the industry in which we operate.
Removed
Issuer Purchases of Equity Securities Period Total number of shares purchased (in thousands) Average price paid per share 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 January 3, 2021 to January 30, 2021 70 $ 176.85 70 $413.6 million January 31, 2021 to February 27, 2021 503 $ 173.37 503 $326.3 million February 28, 2021 to April 3, 2021 437 $ 172.77 437 $250.8 million Total 1,010 $ 173.35 1,010 $250.8 million On October 31, 2019, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of our outstanding common stock, which included approximately $117.0 million authorized under the prior program which was terminated concurrent with this authorization.
Added
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. 31 Table of Contents PERFORMANCE GRAPH April 1, 2017 March 31, 2018 March 30, 2019 March 28, 2020 April 3, 2021 April 2, 2022 Qorvo, Inc. $100.00 $102.76 $104.62 $117.69 $281.36 $177.23 S&P 500 $100.00 $113.99 $124.82 $116.11 $181.54 $209.94 S&P Semiconductors (new industry index) $100.00 $136.49 $143.09 $152.66 $269.43 $343.53 Nasdaq Electronic Components (former industry index) $100.00 $135.34 $133.28 $139.93 $272.10 $324.18 The graph and the table above shall not be deemed "filed" with the SEC for the purpose of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filings made by us with the SEC, regardless of any general incorporation language in such filing. 32 Table of Contents Issuer Purchases of Equity Securities Period Total number of shares purchased (in thousands) Average price paid per share 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 January 2, 2022 to January 29, 2022 284 $ 140.92 284 $ 1,148.5 million January 30, 2022 to February 26, 2022 1,039 132.89 1,039 1,010.5 million February 27, 2022 to April 2, 2022 1,138 130.80 1,138 861.7 million Total 2,461 $ 132.85 2,461 $ 861.7 million On May 5, 2021, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $2.0 billion of our outstanding common stock, which included approximately $236.9 million authorized under a prior program terminated concurrent with the new authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+41 added−36 removed39 unchanged
Biggest changeIn connection with the redemption, we recognized a loss on debt extinguishment of $1.0 million. • We repurchased approximately 3.6 million shares of our common stock for approximately $515.1 million. RESULTS OF OPERATIONS Consolidated The table below presents a summary of our results of operations for fiscal years 2021 and 2020 along with a year-over-year comparison.
Biggest changeOur capital expenditures in fiscal 2022 included investments in premium filter capacity. • We completed the acquisitions of NextInput and United SiC for a total of $389.1 million, net of cash acquired. • We recorded a $48.0 million goodwill impairment charge associated with the NextInput acquisition. • We issued $500.0 million aggregate principal amount of 1.750% senior notes due 2024 (the "2024 Notes"). • We repaid $197.5 million on the 2020 Term Loan (as defined below), plus accrued and unpaid interest. • We repurchased approximately 7.3 million shares of our common stock for approximately $1,152.3 million. 34 Table of Contents RESULTS OF OPERATIONS Consolidated The table below presents a summary of our results of operations for fiscal years 2022 and 2021 along with a year-over-year comparison.
If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. Additional equity or debt financing could be dilutive to holders of our common stock.
If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. Additional debt or equity financing could be dilutive to holders of our common stock.
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. Income Taxes.
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; therefore, no remaining period exists over which to amortize the commissions. Income Taxes.
A number of assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with respect to the intangible assets acquired. The valuation of intangible assets requires our use of valuation techniques such as the income approach.
A number of assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with respect to the intangible assets acquired. The valuation of intangible assets requires the use of valuation techniques such as the income approach.
The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded to goodwill. Goodwill is assigned to our reporting unit that is expected to benefit from the synergies of the business combination.
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 reporting unit that is expected to benefit from the synergies of the business combination.
As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recognized in our Consolidated Statements of Income. Goodwill.
As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recognized in our Consolidated Statements of Income. Goodwill Impairment Testing.
Pension benefit payments were approximately $0.3 million in fiscal 2021 and are expected to be approximately $0.3 million in fiscal 2022. We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a specified percentage of their cash compensation.
Pension benefit payments were approximately $0.3 million in fiscal 2022 and are expected to be approximately $0.3 million in fiscal 2023. We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a specified percentage of their cash compensation.
Based on current and projected levels of cash flow from operations, coupled with our existing cash and cash equivalents and our Credit Facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements.
Based on current and projected levels of cash flows from operations, coupled with our existing cash and cash equivalents and our Credit Facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements.
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 42 Table of Contents sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability.
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.
Revenue is recognized from our consignment programs at a point in time when the products are pulled from consignment inventory by the customer. Revenue recognized for products and services over-time is immaterial (less than 2% of overall revenue).
Revenue is recognized from our consignment programs at a point in time when the products are pulled from consignment inventory by the customer. Revenue recognized for products and services over-time is immaterial (less than 3% of overall revenue).
On the closing date of the 2020 Credit Agreement, we repaid the remaining principal balance of $97.5 million on the 2017 Term Loan and concurrently drew $200.0 million under the 2020 Term Loan. 36 Table of Contents During fiscal 2021, we made principal payments totaling $2.5 million on the 2020 Term Loan.
During fiscal 2021, we made principal payments totaling $2.5 million on the term loan under the 2017 Credit Agreement (the "2017 Term Loan"). On the closing date of the 2020 Credit Agreement, we repaid the remaining principal balance of $97.5 million on the 2017 Term Loan and concurrently drew $200.0 million under the 2020 Term Loan.
We consider a customer's purchase order, which is governed by a sales agreement or our standard terms and conditions, to be the contract with the customer. 41 Table of Contents Our pricing terms are negotiated independently, on a stand-alone basis.
We consider a customer's purchase order, which is governed by a sales agreement or our standard terms and conditions, to be the contract with the customer. Our pricing terms are negotiated independently, on a stand-alone basis.
For fiscal 2020, this resulted in an annual effective tax rate of 15.4%. A valuation allowance has been established against deferred tax assets in the taxing jurisdictions where, based upon the positive and negative evidence available, it is more likely than not that the related deferred tax assets will not be realized.
For fiscal 2021, this resulted in an annual effective tax rate of 9.1%. A valuation allowance has been established against deferred tax assets in the taxing jurisdictions where, based upon the positive and negative evidence available, it is more likely than not that the related deferred tax assets will not be realized.
However, if there is a significant decrease in demand for our products, or if our revenue grows faster than we anticipate, operating cash 37 Table of Contents flows may be insufficient to meet our needs.
However, if there is a significant decrease in demand for our products, or if our revenue grows faster than we anticipate, operating cash flows may be insufficient to meet our needs.
See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 28, 2020, filed with the SEC on May 20, 2020, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended March 30, 2019 along with a year-over-year comparison between fiscal years 2020 and 2019.
See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended April 3, 2021, filed with the SEC on May 24, 2021, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended March 28, 2020 along with a year-over-year comparison between fiscal years 2021 and 2020.
As of April 3, 2021, total remaining unearned compensation cost related to unvested restricted stock units was $103.7 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. LIQUIDITY AND CAPITAL RESOURCES Cash generated by operations is our primary source of liquidity.
As of April 2, 2022, total remaining unearned compensation cost related to unvested restricted stock units was $121.0 million, which will be amortized over the weighted-average remaining service period of approximately 1.2 years. LIQUIDITY AND CAPITAL RESOURCES Cash generated by operations is our primary source of liquidity.
The determination of obsolete or excess inventory requires us to estimate the future demand for our products 39 Table of Contents within specific time horizons, generally 12 to 24 months.
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.
See Note 9 of the Notes to Consolidated Financial Statements for further information. 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.
See Note 16 of the Notes to Consolidated Financial Statements for additional information regarding our stock repurchases. 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.
Other Contractual Obligations As of April 3, 2021, in addition to the amounts shown in the contractual obligations table above, we have $140.3 million of unrecognized income tax benefits and accrued interest and penalties, of which $21.2 million has been recorded as a liability. We are uncertain as to if, or when, such amounts may be settled.
Other Contractual Obligations As of April 2, 2022, in addition to the amounts shown in the contractual obligations table above, we have $13.8 million of unrecognized income tax benefits and accrued interest and penalties which has been recorded as a liability. We are uncertain as to if, or when, such amounts may be settled.
Contract assets and contract liabilities recorded on the Consolidated Balance Sheets were immaterial as of April 3, 2021 and March 28, 2020. We invoice customers upon shipment and recognize revenues in accordance with delivery terms.
Contract assets and contract liabilities recorded on the Consolidated Balance Sheets were immaterial as of April 2, 2022 and April 3, 2021. We invoice customers upon shipment and recognize revenues in accordance with delivery terms.
As discussed in Note 10 of the Notes to Consolidated Financial Statements, we have two pension plans in Germany with a combined benefit obligation of approximately $14.0 million as of April 3, 2021. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the amount and timing of any future cash outflows.
As discussed in Note 10 of the Notes to Consolidated Financial Statements, we have two pension plans in Germany with a combined benefit obligation of approximately $12.1 million as of April 2, 2022. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the amount and timing of any future cash outflows.
The 2020 Credit Agreement amended and restated our previous credit agreement dated as of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement includes the 2020 Term Loan and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”).
The 2020 Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement included a senior term loan (the “2020 Term Loan”) of $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”).
(3) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2029 Notes, the 2031 Notes and the 2020 Term Loan, including anticipated interest payments not recorded as liabilities on our Consolidated Balance Sheet as of April 3, 2021.
(3) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2024 Notes, the 2029 Notes and the 2031 Notes, including anticipated interest payments not recorded as liabilities on our Consolidated Balance Sheet as of April 2, 2022.
Credit Agreement On September 29, 2020, we and certain of our U.S. subsidiaries (the “Guarantors”) entered into a five-year unsecured senior credit facility pursuant to a credit agreement (the “2020 Credit Agreement”) with Bank of America, N.A. acting as administrative agent and a syndicate of lenders.
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 (as amended, restated, modified or otherwise supplemented from time to time, the “2020 Credit Agreement”) with Bank of America, N.A., acting as administrative agent, and a syndicate of lenders.
Pursuant to the 2020 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 securing additional funding commitments from the existing or new lenders.
Pursuant to the 2020 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 2022, there were no borrowings under the Revolving Facility.
MP is a global supplier of cellular, UWB and Wi-Fi solutions for a variety of applications, including smartphones, wearables, laptops, tablets and IoT. IDP is a global supplier of RF, SoC and power management solutions for applications in wireless infrastructure, defense, Wi-Fi, smart home, automotive and IoT.
MP is a global supplier of cellular, UWB, Wi-Fi and other wireless solutions for a variety of applications, including smartphones, wearables, laptops, tablets and IoT. IDP is a global supplier of RF, SoC and power management solutions for a wide range of markets, including cellular and IT infrastructure, automotive, renewable energy, defense and IoT.
As of April 3, 2021, we had $87.5 million in remaining unsatisfied performance obligations with an original duration greater than one year, of which the majority is expected to be recognized as income over the next 12 months.
As of April 2, 2022, we had $424.7 million in remaining unsatisfied performance obligations with an original 44 Table of Contents duration greater than one year, of which the majority is expected to be recognized as income over the next 12 months.
Stock Repurchases On October 31, 2019, we announced that our Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of our outstanding common stock, which included approximately $117.0 million authorized under the prior program which was terminated concurrent with this authorization.
On May 5, 2021, we announced that our Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of our outstanding common stock, which included approximately $236.9 million authorized under the program announced on October 31, 2019, which was terminated concurrent with the new authorization.
(2) Purchase obligations represent payments due related to the purchase of materials and manufacturing services, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 3, 2021.
(2) Purchase obligations represent payments due related to the purchase of materials and manufacturing services, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 2, 2022. See Note 11 of the Notes to Consolidated Financial Statements for further information.
STOCK-BASED COMPENSATION Under Financial Accounting Standards Board 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.
See Note 13 of the Notes to Consolidated Financial Statements for additional information regarding income taxes. 37 Table of Contents 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.
See Note 13 of the Notes to Consolidated Financial Statements for additional information regarding our uncertain tax positions and the amount of unrecognized tax benefits. RECENT ACCOUNTING PRONOUNCEMENTS For a description of accounting pronouncements recently adopted, see Note 1 of the Notes to Consolidated Financial Statements.
See Note 13 of the Notes to Consolidated Financial Statements for additional information regarding our uncertain tax positions and the amount of unrecognized tax benefits.
We provided our products to our largest end customer (Apple) through sales to multiple contract manufacturers, which in the aggregate accounted for 30% and 33% of total revenue in fiscal years 2021 and 2020, respectively. Huawei accounted for less than 5% of total revenue in fiscal 2021 and 10% of total revenue in fiscal 2020.
We provided our products to our largest end customer (Apple) through sales to multiple contract manufacturers, which in the aggregate accounted for approximately 33% and 30% of total revenue in fiscal years 2022 and 2021, respectively. Samsung accounted for approximately 11% and 7% of total revenue in fiscal years 2022 and 2021, respectively.
In fiscal years 2021 and 2019, we completed qualitative assessments and concluded that based on the relevant facts and circumstances, it was more likely than not that each reporting unit’s fair value exceeded its related carrying value and no further impairment testing was required. In fiscal 2020, we performed a quantitative impairment test.
In fiscal 2021, we completed qualitative assessments and concluded that based on the relevant events and circumstances, it was more likely than not that each of the reporting unit’s fair value exceeded its related carrying value, and no further impairment testing was required. Identified Intangible Assets.
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.
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.
We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. See Note 1 of the Notes to Consolidated Financial Statements. Inventory Reserves. The valuation of inventory requires us to estimate obsolete or excess inventory.
Our critical accounting policies are reviewed periodically with the Audit Committee of the Board of Directors. We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. See Note 1 of the Notes to Consolidated Financial Statements. Inventory Reserves.
("Parent"). A Guarantor can be released in certain customary circumstances. Our other U.S. subsidiaries and our non-U.S. subsidiaries do not guarantee the 2029 Notes and the 2031 Notes (such subsidiaries are referred to as the "Non-Guarantors").
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").
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. Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted.
Product-specific facts and circumstances reviewed in the inventory 41 Table of Contents 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.
In-process research and development ("IPRD") assets represent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of the acquisition; initially, these are classified as IPRD and are not subject to amortization. Upon completion of development, IPRD assets are transferred to developed technology and are amortized over their useful lives.
We amortize definite-lived intangible assets (including developed technology, customer relationships, technology licenses, backlog and trade names) over their estimated useful lives. In-process research and development ("IPRD") assets represent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of the acquisition; initially, these are classified as IPRD and are not subject to amortization.
In accordance with ASC 350, we may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. 40 Table of Contents In performing a qualitative assessment, we consider (i) our overall historical and projected future operating results, (ii) if there was a significant decline in our stock price for a sustained period, (iii) if there was a significant change in our market capitalization relative to our net book value, and (iv) if there was a prolonged or more significant slowdown in the worldwide economy of the semiconductor industry, as well as other relevant events and factors affecting the reporting unit.
In performing qualitative assessments, we consider (i) our overall historical and projected future operating results, (ii) if there was a significant decline in our stock price for a sustained period, (iii) if there was a significant change in our market capitalization relative to our net book value, and (iv) if there was a prolonged or more significant slowdown in the worldwide economy of the semiconductor industry, as well as other relevant events and factors affecting the reporting unit.
As of April 3, 2021, we had working capital of approximately $1,802.2 million, including $1,397.9 million in cash and cash equivalents, compared to working capital of $1,151.5 million, including $714.9 million in cash and cash equivalents, as of March 28, 2020.
As of April 2, 2022, we had working capital of approximately $1,774.7 million, including $972.6 million in cash and cash equivalents, compared to working capital of approximately $1,802.2 million, including $1,397.9 million in cash and cash equivalents, as of April 3, 2021.
This was primarily comprised of tax expense related to domestic and international operations generating pre-tax book income, the impact of the Tax Act's GILTI provisions, taxes on certain foreign earnings which are not permanently reinvested, and an increase in gross unrecognized tax benefits, offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits.
This was primarily comprised of tax expense related to domestic and international operations generating pre-tax book income (exclusive of nondeductible expenses associated with acquisition related adjustments), the impact of the Tax Act's GILTI provisions and an increase in gross unrecognized tax benefits, offset by a tax benefit related to international operations generating pre-tax book losses and domestic tax credits.
Operating expenses increased primarily due to higher personnel costs and increased product development spend, partially offset by lower acquisition and integration related expenses and lower travel expense. • Net income per diluted share was $6.32 for fiscal 2021, compared to net income per diluted share of $2.80 for fiscal 2020. • Cash flow from operations was $1,301.9 million for fiscal 2021, compared to $945.6 million for fiscal 2020.
Operating expenses increased primarily due to higher personnel costs, a goodwill impairment charge and increased product development spend, partially offset by lower intangible amortization expense and lower incentive-based compensation. • Net income per diluted share was $9.26 for fiscal 2022, compared to net income per diluted share of $6.32 for fiscal 2021. • Cash flows from operations was $1,049.2 million for fiscal 2022, compared to $1,301.9 million for fiscal 2021.
SUPPLEMENTAL PARENT AND GUARANTOR FINANCIAL INFORMATION In accordance with the Indentures, our obligations under the 2029 Notes and the 2031 Notes are fully and unconditionally guaranteed on a joint and several unsecured basis by the Guarantors, which are listed on Exhibit 22 to this Annual Report on Form 10-K. Each Guarantor is 100% owned, directly or indirectly, by Qorvo, Inc.
See Note 10 of the Notes to Consolidated Financial Statements for further information. 40 Table of Contents 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.
We also have an obligation related to the Transitional Repatriation Tax. We have elected to pay the remaining obligation of $5.4 million, which has been recorded as a liability, over four years. See Note 13 of the Notes to Consolidated Financial Statements for further information.
We also have an obligation related to the Transitional Repatriation Tax that we elected to pay over eight years which has been recorded as a liability. The remaining obligation of $5.4 million is to be paid over the next four years.
See Note 5 of the Notes to Consolidated Financial Statements for further information. Cash Flows from Financing Activities Net cash used in financing activities in fiscal 2021 was $401.9 million, compared to net cash provided by financing activities of $165.6 million in fiscal 2020. This decrease in cash flows was due primarily to our debt financing activity.
See Note 5 of the Notes to Consolidated Financial Statements for additional information regarding our business acquisitions. Cash Flows from Financing Activities Net cash used in financing activities in fiscal 2022 was $875.5 million, compared to $401.9 million in fiscal 2021. This increase in cash used in financing activities was primarily due to stock repurchases.
We recognized $66.0 million of interest expense in fiscal 2020 primarily related to the 2026 Notes and the 2029 Notes. Interest expense in the preceding table for fiscal years 2021 and 2020 is net of capitalized interest of $4.1 million and $5.6 million, respectively.
During fiscal 2021, we recorded interest expense primarily related to our 5.50% senior notes due July 15, 2026 (the "2026 Notes"), the 2029 Notes and the 2031 Notes. Interest expense in the preceding table for fiscal years 2022 and 2021 is net of capitalized interest of $3.7 million and $4.1 million, respectively.
For fiscal 2021, this resulted in an annual effective tax rate of 9.1%. 35 Table of Contents Income tax expense for fiscal 2020 was $60.8 million.
For fiscal 2022, this resulted in an annual effective tax rate of 12.5%. Income tax expense for fiscal 2021 was $73.8 million.
Our $1,397.9 million of total cash and cash equivalents as of April 3, 2021, includes approximately $1,070.3 million held by our foreign subsidiaries, of which $954.8 million is held by Qorvo International Pte. Ltd. in Singapore.
Our $972.6 million of total cash and cash equivalents as of April 2, 2022, includes $831.8 million held by our foreign subsidiaries, of which $709.5 million is held by Qorvo International Pte. Ltd. in Singapore.
If the undistributed earnings of our foreign subsidiaries are needed in the U.S., we may be required to pay state income and/or foreign local withholding taxes to repatriate these earnings. At this time, we are not able to estimate the long-term impact of the COVID-19 pandemic on our business, financial condition, results of operations, and/or cash flow.
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.
As of the end of fiscal years 2021 and 2020, the valuation allowance against domestic and foreign deferred tax assets was $36.5 million and $35.3 million, respectively. See Note 13 of the Notes to Consolidated Financial Statements for additional information regarding income taxes.
As of the end of fiscal years 2022 and 2021, the valuation allowance against domestic and foreign deferred tax assets was $36.3 million and $36.5 million, respectively.
Inventory reserves had an impact on margins of less than 2% in fiscal years 2021 and 2020. Property and Equipment.
Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted. Inventory reserves had an impact on margins of less than 2% in fiscal years 2022 and 2021. Property and Equipment.
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. Revenue Recognition. We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor, or at completion of a consignment process.
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.
Productivity and lower inventory charges also contributed to gross margin expansion, partially offset by more moderate price effects. • Operating income was $906.6 million in fiscal 2021, compared to $423.2 million in fiscal 2020. This increase was primarily due to higher revenue and higher gross margin, partially offset by higher operating expenses.
The increase in gross margin was partially offset by average selling price erosion. • Operating income was $1,226.1 million in fiscal 2022, compared to $906.6 million in fiscal 2021. This increase was primarily due to higher revenue and favorable gross margin, partially offset by higher operating expenses.
Other (expense) income, net During fiscal 2021, we recognized a loss on debt extinguishment of $62.0 million. See Note 9 of the Notes to Consolidated Financial Statements for information regarding our debt extinguishment activity. During fiscal 2021, we recorded $21.5 million of income based on our share of the earnings from our equity method investments.
During fiscal 2021, we recorded $21.5 million of income based on our share of the earnings from our limited partnership investments, and we recorded net gains of $9.1 million from other investments. In addition, we recognized a loss on debt extinguishment of $62.0 million primarily related to the redemption of our 2026 Notes on October 16, 2020.
CONTRACTUAL OBLIGATIONS The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 3, 2021, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.
Further, we cannot be sure that additional debt or equity financing, if required, will be available on favorable terms, if at all. 39 Table of Contents CONTRACTUAL OBLIGATIONS The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 2, 2022, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.
During fiscal 2021, we made principal payments totaling $2.5 million on the term loan under the 2017 Credit Agreement (the “2017 Term Loan”).
During fiscal 2021, we made principal payments totaling $2.5 million on the 2020 Term Loan, and during fiscal 2022, we repaid the remaining principal balance of $197.5 million on the 2020 Term Loan.
We perform a quarterly review of significant intangible assets to determine whether facts and circumstances (including external factors such as industry and economic trends and internal factors such as changes in our business strategy and forecasts) indicate that the carrying amount of the assets may not be recoverable.
The asset balances relating to abandoned projects are impaired and expensed to R&D. 43 Table of Contents We evaluate definite-lived intangible assets for impairment in accordance with ASC 360-10-35, " Impairment or Disposal of Long-Lived Assets " to determine whether facts and circumstances (including external factors such as industry and economic trends and internal factors such as changes in our business strategy and forecasts) indicate that the carrying amount of the assets may not be recoverable.
Fiscal 2021 Fiscal 2020 Increase (Decrease) (In thousands, except percentages) Dollars % of Revenue Dollars % of Revenue Dollars Percentage Change Revenue $ 4,015,307 100.0 % $ 3,239,141 100.0 % $ 776,166 24.0 % Cost of goods sold 2,131,741 53.1 1,917,378 59.2 214,363 11.2 Gross profit 1,883,566 46.9 1,321,763 40.8 561,803 42.5 Research and development 570,395 14.2 484,414 14.9 85,981 17.7 Selling, general and administrative 367,238 9.1 343,569 10.6 23,669 6.9 Other operating expense 39,306 1.0 70,564 2.2 (31,258) (44.3) Operating income $ 906,627 22.6 % $ 423,216 13.1 % $ 483,411 114.2 % Revenue Revenue increased primarily due to higher demand for our 5G mobile solutions, 5G base station products and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei.
Fiscal 2022 Fiscal 2021 Increase (Decrease) (In thousands, except percentages) Dollars % of Revenue Dollars % of Revenue Dollars Percentage Change Revenue $ 4,645,714 100.0 % $ 4,015,307 100.0 % $ 630,407 15.7 % Cost of goods sold 2,359,546 50.8 2,131,741 53.1 227,805 10.7 Gross profit 2,286,168 49.2 1,883,566 46.9 402,602 21.4 Research and development 623,636 13.4 570,395 14.2 53,241 9.3 Selling, general and administrative 349,718 7.5 367,238 9.1 (17,520) (4.8) Other operating expense 86,745 1.9 39,306 1.0 47,439 120.7 Operating income $ 1,226,069 26.4 % $ 906,627 22.6 % $ 319,442 35.2 % Revenue Revenue increased primarily due to higher demand for our 5G mobile solutions and our power management, automotive and broadband products, partially offset by lower demand for our base station and defense and aerospace products.
If we assess these qualitative factors and conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we decide not to perform a qualitative assessment, then a quantitative impairment test is performed.
Therefore, we determined that it was more likely than not that the fair value of the reporting unit was less than its carrying amount, and we performed a quantitative assessment to calculate the fair value of the reporting unit. Our quantitative assessment considered both the income and market approaches to estimate the fair value of the reporting unit.
The total deferred compensation obligation as of April 3, 2021 was $32.8 million, of which $1.2 million is 38 Table of Contents estimated to be paid out in fiscal 2022. See Note 10 of the Notes to Consolidated Financial Statements for further information.
The total deferred compensation obligation as of April 2, 2022 was $39.4 million, of which $1.5 million is estimated to be paid in fiscal 2023.
Operating Segments Mobile Products Fiscal Year Increase (In thousands, except percentages) 2021 2020 Dollars Percentage Change Revenue $ 2,856,813 $ 2,397,740 $ 459,073 19.1 % Operating income 1,008,171 715,514 292,657 40.9 Operating income as a % of revenue 35.3 % 29.8 % MP revenue increased primarily due to higher demand for our 5G mobile solutions and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei.
Operating Segments Mobile Products Fiscal Year Increase (In thousands, except percentages) 2022 2021 Dollars Percentage Change Revenue $ 3,545,253 $ 2,856,813 $ 688,440 24.1 % Operating income 1,290,132 1,008,171 281,961 28.0 Operating income as a % of revenue 36.4 % 35.3 % MP revenue increased primarily due to higher demand for our mobile solutions driven by 5G content increases with our largest customers.
Operating expenses increased primarily due to higher personnel costs and increased product development spend, partially offset by lower travel expense. 34 Table of Contents Infrastructure and Defense Products Fiscal Year Increase (In thousands, except percentages) 2021 2020 Dollars Percentage Change Revenue $ 1,158,494 $ 841,401 $ 317,093 37.7 % Operating income 283,507 145,295 138,212 95.1 Operating income as a % of revenue 24.5 % 17.3 % IDP revenue increased primarily due to higher demand for our 5G base station products, Wi-Fi products and defense and aerospace products.
Infrastructure and Defense Products Fiscal Year Decrease (In thousands, except percentages) 2022 2021 Dollars Percentage Change Revenue $ 1,100,461 $ 1,158,494 $ (58,033) (5.0) % Operating income 261,511 283,507 (21,996) (7.8) Operating income as a % of revenue 23.8 % 24.5 % IDP revenue decreased primarily due to lower demand for our base station and defense and aerospace products, partially offset by increased demand for our power management, automotive and broadband products.
The program did not require us to repurchase a minimum number of shares and did not have a fixed term. We repurchased 3.6 million shares, 6.4 million shares and 9.1 million shares of our common stock during fiscal years 2021, 2020 and 2019, respectively, at an aggregate cost of $515.1 million, $515.1 million and $638.1 million, respectively.
We repurchased 7.3 million shares, 3.6 million shares and 6.4 million shares of our common stock during fiscal years 2022, 2021 and 2020, respectively, at an aggregate cost of $1,152.3 million, $515.1 million and $515.1 million, respectively. Cash Flows from Operating Activities Operating activities in fiscal 2022 generated cash of $1,049.2 million, compared to $1,301.9 million in fiscal 2021.
INTEREST, OTHER (EXPENSE) INCOME AND INCOME TAXES Fiscal Year (In thousands) 2021 2020 Interest expense $ (75,198) $ (60,392) Other (expense) income, net (24,049) 32,265 Income tax expense (73,769) (60,764) Interest expense We recognized $79.3 million of interest expense in fiscal 2021 primarily related to the 2026 Notes, the 2029 Notes and the 2031 Notes.
See Note 17 of the Notes to Consolidated Financial Statements for a reconciliation of segment operating income to the consolidated operating income for fiscal years 2022, 2021 and 2020. 36 Table of Contents INTEREST, OTHER INCOME (EXPENSE) AND INCOME TAXES Fiscal Year (In thousands) 2022 2021 Interest expense $ (63,326) $ (75,198) Other income (expense), net 18,341 (24,049) Income tax expense (147,731) (73,769) Interest expense During fiscal 2022, we recorded interest expense primarily related to our 4.375% senior notes due 2029 (the "2029 Notes") and our 3.375% senior notes due 2031 (the "2031 Notes").
MP operating income increased primarily due to increased volume, improved mix, and higher factory utilization and productivity associated with the ramp of 5G mobile solutions and Wi-Fi products, partially offset by more moderate price effects and higher operating expenses.
MP operating income increased primarily due to the effects of increased revenue and lower unit costs on higher volume and productivity. These increases were partially offset by average selling price erosion and higher operating expenses.
Selling, General and Administrative Selling, general and administrative expense increased primarily due to higher personnel and commission expenses, partially offset by lower travel expense and lower intangible amortization expense. Other Operating Expense In fiscal 2021, we recognized $27.3 million of post-combination compensation expense as well as other acquisition and integration related costs.
These increases were partially offset by lower incentive-based compensation. 35 Table of Contents Selling, General and Administrative Selling, general and administrative expense decreased primarily due to lower intangible amortization expense and lower incentive-based compensation. These decreases were partially offset by higher personnel and commission expenses.
Under this program, share repurchases were made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The number and timing of shares repurchased depended on general market conditions, regulatory requirements, alternative investment opportunities and other considerations.
The 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.
Payments Due By Fiscal Period Total Payments 2022 2023-2024 2025-2026 2027 and thereafter Capital commitments (1) $ 78,879 $ 78,879 $ — $ — $ — Purchase obligations (2) 340,351 284,443 52,242 3,666 — Leases 94,396 17,691 24,927 17,814 33,964 Long-term debt obligations (3) 2,328,592 68,259 129,393 302,253 1,828,687 Total $ 2,936,614 $ 466,963 $ 231,489 $ 341,547 $ 1,896,615 (1) Capital commitments represent obligations for the purchase of property and equipment, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 3, 2021.
Payments Due By Fiscal Period Total Payments 2023 2024-2025 2026-2027 2028 and thereafter Capital commitments (1) $ 137,176 $ 116,482 $ 20,694 $ — $ — Purchase obligations (2) 2,019,516 902,162 880,450 236,904 — Leases 104,886 20,839 30,581 22,062 31,404 Long-term debt obligations (3) 2,586,399 69,587 627,313 133,437 1,756,062 Total $ 4,847,977 $ 1,109,070 $ 1,559,038 $ 392,403 $ 1,787,466 (1) Capital commitments represent obligations for the purchase of property and equipment, a majority of which are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of April 2, 2022.
In addition, we have taken steps to effectively implement social distancing, including rotating shifts and remote-work options whenever possible. 31 Table of Contents Business Segments We design, develop, manufacture and market our products to U.S. and international OEMs and ODMs in two operating segments, which are also our reportable segments: Mobile Products ("MP") and Infrastructure and Defense Products ("IDP").
OVERVIEW Company Qorvo® is a global leader in the development and commercialization of technologies and products for wireless, wired and power markets. We design, develop, manufacture and market our products to U.S. and international OEMs and ODMs in two operating segments, MP and IDP, which are also our reportable segments.
Fiscal 2021 Financial Highlights • Revenue increased 24.0% in fiscal 2021 to $4,015.3 million, compared to $3,239.1 million in fiscal 2020, driven primarily by higher demand for our 5G mobile solutions, 5G base station products and Wi-Fi products, partially offset by lower shipments of our mobile products to Huawei. • Gross margin for fiscal 2021 was 46.9%, compared to 40.8% in fiscal 2020, primarily due to increased volume, improved mix, and higher factory utilization associated with the ramp of 5G, Wi-Fi 6, and other products.
However, the recent COVID-19 lockdowns in China could negatively impact the overall demand for our products, cash flows from operations, need for capital expenditures and our liquidity position in future periods. 33 Table of Contents Fiscal 2022 Financial Highlights • Revenue increased 15.7% in fiscal 2022 to $4,645.7 million, compared to $4,015.3 million in fiscal 2021, driven primarily by higher demand for our 5G mobile solutions and our power management, automotive and broadband products, partially offset by lower demand for our base station and defense and aerospace products. • Gross margin for fiscal 2022 was 49.2%, compared to 46.9% in fiscal 2021, primarily due to lower intangible amortization expense as well as lower unit costs on higher volume and productivity.
Cash Flows from Investing Activities Net cash used in investing activities in fiscal 2021 was $218.7 million, compared to $1,105.7 million in fiscal 2020. During fiscal 2021, we acquired 7Hugs for $47.7 million and during fiscal 2020, we acquired Active-Semi International, Inc., Cavendish, Custom MMIC and Decawave Limited, which resulted in net cash outflows of $946.0 million.
This increase in cash used in investing activities was primarily due to the acquisitions of NextInput and United SiC in fiscal 2022, which resulted in net cash outflows of $389.1 million, as compared to the acquisition of 7Hugs Labs S.A.S. in fiscal 2021, which resulted in net cash outflows of $47.7 million.
Removed
OVERVIEW Company Qorvo ® is a leader in the development and commercialization of technologies and products for wireless and wired connectivity. We combine highly differentiated technologies, systems-level expertise and manufacturing scale to serve a diverse set of customers a broad portfolio of innovative solutions that enable a more connected world.
Added
In fiscal 2022, the semiconductor industry continued to experience supply constraints, and we have taken actions to address short and long-term supply requirements. During the second quarter ended October 2, 2021, we entered into a long-term capacity agreement with a foundry supplier to reserve manufacturing supply capacity.
Removed
The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry. During fiscal 2021, we did not encounter material disruptions to our global supply chain or operations, and we believe that our cash on hand, cash flow from operations and availability under our revolving credit facility provide us with sufficient liquidity.
Added
Under the agreement we are required to purchase, and the foundry supplier is required to supply, a certain number of wafers for calendar years 2022 through 2025. See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding this agreement.
Removed
The duration, severity and future impact of the COVID-19 pandemic remains uncertain and may result in significant disruptions to our operations, including our supply chain, and may negatively impact our financial condition. We will continue to monitor the implications of the COVID-19 pandemic on our business, as well as on our customers' and suppliers' businesses.
Added
The COVID-19 pandemic (including the recent COVID-19 lockdowns in China) has been a contributing factor of the semiconductor industry supply constraints and may continue to cause volatility and uncertainty in customer demand, worldwide economies and financial markets for an extended period of time.
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As always, we are committed to protecting the health and safety of our employees in all locations. We implemented multiple protocols in our facilities worldwide, including increased cleaning and sanitation procedures, pre-shift temperature screenings, and enhanced use of personal protective equipment.
Added
To date, any negative impact of COVID-19 on the overall demand for our products, cash flows from operations, need for capital expenditures and our liquidity position has been limited, although we are addressing capacity constraints in our supply chain as described above.
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These business segments are based on the organizational structure and information reviewed by our Chief Executive Officer, who is our chief operating decision maker ("CODM") and are managed separately based on the end markets and applications they support. The CODM allocates resources and evaluates the performance of each reportable segment primarily based on operating income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Note 9 of the Notes to Consolidated Financial Statements for further information. The outstanding balance related to the Credit Facility as of April 3, 2021 was $197.5 million. A potential change in the associated interest rates would be immaterial to the results of our operations.
Biggest changeIf the Credit Facility were to be drawn (through a term loan or our Revolving Facility), it would bear interest at a variable rate. See Note 9 of the Notes to Consolidated Financial Statements for further information. As of April 2, 2022, we did not have any outstanding borrowings under the Credit Facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management The primary objective of our financial risk management activities is to reduce the negative financial impact resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices (the “Underlying Exposures”).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management The primary objective of our financial risk management activities is to reduce the negative financial impact resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices (the "Underlying Exposures").
For fiscal 2021, we incurred a foreign currency loss of $3.8 million as compared to a loss of $2.2 million in fiscal 2020, which is recorded in “Other (expense) income, net.” Our financial instrument holdings, including foreign receivables, cash and payables at April 3, 2021, were analyzed to determine their sensitivity to foreign exchange rate changes.
For fiscal 2022, we incurred a foreign currency loss of $1.5 million as compared to a loss of $3.8 million in fiscal 2021, which is recorded in "Other income (expense), net." Our financial instrument holdings, including foreign receivables, cash and payables at April 2, 2022, were analyzed to determine their sensitivity to foreign exchange rate changes.
If the U.S. dollar declined in value 10% in relation to the re-measured foreign currency instruments, our net income would have increased by approximately $5.7 million in fiscal 2021.
If the U.S. dollar declined in value 10% in relation to the re-measured foreign currency instruments, our net income would have decreased by approximately $4.4 million in fiscal 2022. If the U.S. dollar increased in value 10% in relation to the re-measured foreign currency instruments, our net income would have increased by approximately $3.6 million in fiscal 2022.
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. 44 Table of Contents
We also have an active reclamation process to capture any unused gold. While we attempt to mitigate the risk of increases in commodities-related costs, there can be no assurance that we will be able to successfully safeguard against potential short-term and long-term commodity price fluctuations. 46 Table of Contents
Similarly, there can be no assurance that our financial risk management activities will be successful in mitigating the financial impact resulting from movements in the Underlying Exposures. Interest Rate Risk We are exposed to interest rate risk via the terms of our Credit Facility, which is comprised of the 2020 Term Loan and Revolving Facility with variable interest rates.
Similarly, there can be no assurance that our financial risk management activities will be successful in mitigating the financial impact resulting from movements in the Underlying Exposures. 45 Table of Contents Interest Rate Risk We may be exposed to interest rate risk via the terms of our Credit Facility.
Accordingly, a fluctuation in the price of each equity security could have an adverse impact on the fair value of our investments. As of April 3, 2021, our marketable equity investments were immaterial. See Note 7 of the Notes to Consolidated Financial Statements for further information. Commodity Price Risk We routinely use precious metals in the manufacture of our products.
Equity Price Risk Our marketable equity investments in publicly traded companies are subject to equity market price risk. Accordingly, a fluctuation in the price of each equity security could have an adverse impact on the fair value of our investments. As of April 2, 2022, our marketable equity investments were immaterial.
Supplies for such commodities may from time to time become restricted, or general market factors and conditions may affect the pricing of such commodities. We also have an active reclamation process to capture any unused gold.
See Note 7 of the Notes to Consolidated Financial Statements for further information. Commodity Price Risk We routinely use precious metals in the manufacture of our products. Supplies for such commodities may from time to time become restricted, or general market factors and conditions may affect the pricing of such commodities.
Removed
If the U.S. dollar increased in value 10% in relation to the re-measured foreign currency instruments, our net income would have decreased by approximately $4.7 million in fiscal 2021. 43 Table of Contents Equity Price Risk Our marketable equity investments in publicly traded companies are subject to equity market price risk.

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