Qorvo, Inc. (QRVO) FY 2025 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, including the notes thereto, set forth in Part II, Item 8 of this report.

Qorvo® is a global leader in the development and commercialization of technologies and products for wireless, wired and power markets.

We design, develop, manufacture and market our products to U.S. and international OEMs and ODMs in three reportable operating segments: HPA, CSG and ACG. HPA is a leading global supplier of RF, analog mixed signal and power management solutions. CSG is a leading global supplier of connectivity and sensor solutions, with broad expertise spanning UWB, Matter, BLE, Zigbee, Thread, Wi-Fi, cellular solutions for the IoT and MEMS-based sensors. ACG is a leading global supplier of advanced cellular solutions for smartphones, wearables, laptops, tablets and other devices.

Fiscal 2025 Overview

•Revenue decreased 1.3% in fiscal 2025 to $3,719.0 million, compared to $3,769.5 million in fiscal 2024, resulting from a decrease in our ACG segment revenue driven by a mix shift among smartphone customers to lower RF content 5G smartphones. Revenue increased in our HPA segment driven by higher demand for our D&A products supporting the radar, communications and electronic warfare markets. Revenue increased in our CSG segment driven by our Wi-Fi components and UWB solutions as a result of new product releases and improved channel inventory levels.

•Gross margin for fiscal 2025 was 41.3%, compared to 39.5% in fiscal 2024, driven by improved factory utilization and favorable business mix, while average selling-price erosion negatively impacted gross margin. Charges related to a long-term capacity reservation agreement negatively impacted gross margin by 1.0% in fiscal 2024.

•Operating income was $95.5 million in fiscal 2025, compared to $91.7 million in fiscal 2024.

•Net income per diluted share was $0.58 for fiscal 2025, compared to net loss per share of $0.72 for fiscal 2024.

•Operating activities in fiscal 2025 generated cash of $622.2 million, compared to $833.2 million in fiscal 2024.

•Capital expenditures were $137.6 million in fiscal 2025, compared to $127.2 million in fiscal 2024.

•We repurchased approximately 4.0 million shares of our common stock for approximately $358.8 million.

•We completed the divestiture of our assembly and test operations in China in May 2024 and are operating under a supply agreement with Luxshare.

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•We repaid the remaining balance of $412.5 million on our 1.750% senior notes due 2024 (the "2024 Notes") with cash on hand at maturity in December 2024.

•We completed the divestiture of our SiC power device business in January 2025.

•We recorded $280.8 million in restructuring-related charges, which includes goodwill and intangible asset impairment charges of $192.6 million. The restructuring-related charges were primarily from actions to reduce operating expenses, streamline our manufacturing footprint and focus on opportunities that align with our long-term profitability objectives.

Recent Developments

The U.S. government has imposed a series of tariffs on U.S. trading partners to address trade imbalances, cross-border issues, and other foreign policy disputes that have been met with both real and threatened retaliatory measures by impacted countries. We continue to closely monitor these developments (and any escalation thereof) and any retaliatory measures and are actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency and help mitigate potential future impacts.

RESULTS OF OPERATIONS

Consolidated

The table below presents a summary of our results of operations for fiscal years 2025 and 2024 along with a year-over-year comparison. Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, filed with the SEC on May 20, 2024, which is incorporated by reference herein, for a summary of our results of operations for the fiscal year ended April 1, 2023 along with a year-over-year comparison between fiscal years 2024 and 2023.

(1) Other operating expense includes goodwill and intangible asset impairment charges of $192.6 million and $221.4 million for fiscal years 2025 and 2024, respectively.

Revenue

The decrease in consolidated revenue resulted from a $152.8 million decrease in ACG revenue and increases in revenue of $64.3 million and $38.0 million in HPA and CSG, respectively, which are further discussed in our Operating Segments results below.

We provide products to our largest end customer (Apple) through sales to multiple contract manufacturers, which in the aggregate accounted for approximately 47% and 46% of total revenue in fiscal years 2025 and 2024, respectively. Samsung accounted for approximately 10% and 12% of total revenue in fiscal years 2025 and 2024, respectively. These customers primarily purchase RF solutions for a variety of mobile devices.

International shipments amounted to $1,491.8 million in fiscal 2025 (approximately 40% of revenue) compared to $1,593.6 million in fiscal 2024 (approximately 42% of revenue). Shipments to Asia totaled $1,405.9 million in

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fiscal 2025 (approximately 38% of revenue) compared to $1,505.3 million in fiscal 2024 (approximately 40% of revenue).

Gross Margin

The increase in gross margin in fiscal 2025 was driven by improved factory utilization and favorable business mix, while average selling-price erosion negatively impacted gross margin. Charges related to a long-term capacity reservation agreement, which included a contract termination fee, negatively impacted gross margin by 1.0% in fiscal 2024.

Operating Expenses

Research and Development

The increase in research and development expense was driven by a $54.8 million increase in employee-related costs (including salaries and benefits and stock-based compensation expense) related to the development of new process technologies and the expansion of our product portfolio as we support diversification in our businesses.

Selling, General and Administrative

The increase in selling, general and administrative expense was driven by a $15.2 million increase in employee-related costs (including salaries and benefits and stock-based compensation expense).

Other Operating Expense

In fiscal 2025, "Other operating expense" includes goodwill and intangible asset impairment charges of $192.6 million, other restructuring-related charges of $60.3 million and $14.9 million of expenses associated with multiyear projects to upgrade our core business systems, prior to cancellation of certain projects in the third quarter of fiscal 2025. In fiscal 2024, "Other operating expense" includes goodwill impairment charges of $221.4 million, restructuring-related charges of $70.4 million and $12.0 million of expenses associated with certain multiyear projects to upgrade our core business systems. Refer to Note 6 of the Notes to Consolidated Financial Statements for additional information on goodwill and intangible asset impairment charges and Note 12 of the Notes to Consolidated Financial Statements for additional information on restructuring-related charges.

Operating Segments

High Performance Analog

The $64.3 million increase in HPA revenue was attributable to a $60.9 million increase in revenue from D&A, infrastructure and power management. The increase in revenue from D&A was driven by higher demand for our products supporting the radar, communications and electronic warfare markets, as well as incremental revenue resulting from the acquisition of Anokiwave, Inc. ("Anokiwave") in the fourth quarter of fiscal 2024. The increase in revenue from infrastructure was driven by the timing of infrastructure deployment cycles, and the increase in revenue from power management (which included our SiC-based products and products supporting solid-state drives and power tools) was driven by improved channel inventory levels compared to the prior year.

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The increase in HPA operating income was driven by higher revenue and improved factory utilization, partially offset by an increase in operating expenses of $28.6 million, resulting from the acquisition of Anokiwave and higher salaries and benefits primarily associated with investments in our D&A and power management businesses.

HPA results for fiscal 2025 include $27.7 million in revenue and an operating loss of $15.3 million from the SiC power device business, which was sold in January 2025. HPA results for fiscal 2024 included $21.0 million in revenue and an operating loss of $20.1 million from the SiC power device business.

Connectivity and Sensors Group

The $38.0 million increase in CSG revenue was attributable to a $45.1 million increase in revenue for our Wi-Fi components, UWB solutions, automotive connectivity and sensing products, reflecting new product releases and improved channel inventory levels. These revenue increases were partially offset by a $7.1 million decrease in revenue from our biotechnology business, which was sold in fiscal 2024.

The decrease in CSG operating loss was due to improved factory utilization, favorable product mix and the impact of higher revenue, partially offset by an increase in operating expenses. Research and development expenses increased $7.7 million in our automotive connectivity business related to expanding our product portfolio. Fiscal 2024 operating expenses related to our biotechnology business (which was sold in the third quarter of fiscal 2024) totaled $9.4 million.

Advanced Cellular Group

The $152.8 million decrease in ACG revenue was driven by a mix shift among smartphone customers to lower RF content 5G smartphones. We made the decision in the third quarter of fiscal 2025 to strategically focus on opportunities in the flagship and premium tiers within the Android ecosystem and reduce our exposure in mass-market Android smartphones.

The decrease in ACG operating income was driven by lower revenue, an increase in operating expenses of $38.9 million and average selling-price erosion. The increase in operating expenses was driven by research and development expenses, including salaries and benefits, related to developing new process technologies and expanding our product portfolio.

Refer to Note 17 of the Notes to Consolidated Financial Statements for a reconciliation of segment operating income to the consolidated operating income for fiscal years 2025, 2024 and 2023.

INTEREST, OTHER INCOME AND INCOME TAXES

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Interest expense

During fiscal years 2025 and 2024, we recorded interest expense primarily related to the 4.375% senior notes due 2029 (the "2029 Notes"), the 3.375% senior notes due 2031 (the "2031 Notes") and the 2024 Notes. Interest expense for fiscal 2025 also includes financing costs related to certain inventory (subject to repurchase) in connection with a supply agreement. Interest expense in the preceding table for fiscal years 2025 and 2024 is net of capitalized interest of $3.9 million and $2.9 million, respectively.

Other income, net

During fiscal years 2025 and 2024, we recorded interest income of $47.1 million and $38.3 million, respectively. Interest income increased in fiscal 2025 primarily due to higher cash balances. In addition, we recorded gains of $2.8 million and $9.9 million on investments in our non-qualified deferred compensation plan in fiscal years 2025 and 2024, respectively. Refer to Note 10 of the Notes to Consolidated Financial Statements for additional information regarding our non-qualified deferred compensation plan.

Income tax expense

Income tax expense for fiscal 2025 was $10.3 million, which was primarily comprised of tax expense related to international operations generating pre-tax book income and the impact of GILTI, partially offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits. During fiscal 2025, we also incurred incremental tax expense associated with various restructuring initiatives. This resulted in an annual effective tax rate of 15.6% for fiscal 2025.

Income tax expense for fiscal 2024 was $143.9 million, which was primarily comprised of tax expense related to international operations generating pre-tax book income and the impact of GILTI, offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits. During fiscal 2024, we also incurred incremental tax expense associated with the reversal of our permanent reinvestment assertion related to a fiscal 2024 restructuring initiative. This resulted in an annual effective tax rate of 195.6% for fiscal 2024.

A valuation allowance has been established against deferred tax assets in the taxing jurisdictions where, based upon the positive and negative evidence available, it is more likely than not that the related deferred tax assets will not be realized. Realization is dependent upon generating future income in the taxing jurisdictions in which the operating loss carryovers, credit carryovers, depreciable tax basis and other deferred tax assets exist. Management reevaluates the ability to realize the benefit of these deferred tax assets on a quarterly basis. As of March 29, 2025 and March 30, 2024, the valuation allowance against domestic and foreign deferred tax assets was $85.7 million and $43.6 million, respectively.

Refer to Note 13 of the Notes to Consolidated Financial Statements for additional information regarding income taxes.

STOCK-BASED COMPENSATION

In accordance with 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 awards. The fair value of employee stock purchase plan awards is estimated on the date of grant using a Black-Scholes pricing model based on the historical volatility, dividend yield, term and risk-free interest rate. The fair value per unit of each restricted stock unit is determined on the grant date using market price and is recognized as expense over the requisite service period based on awards ultimately expected to vest.

As of March 29, 2025, total remaining unearned compensation cost related to unvested restricted stock units was $186.8 million, which will be amortized over the weighted-average remaining service period of approximately 1.4 years.

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Refer to Note 15 of the Notes to Consolidated Financial Statements for additional information regarding stock-based compensation.

LIQUIDITY AND CAPITAL RESOURCES

Cash generated by operations is our primary source of liquidity. As of March 29, 2025, we had working capital of approximately $1,384.1 million, including $1,021.2 million in cash and cash equivalents, compared to working capital of approximately $1,215.9 million, including $1,029.3 million in cash and cash equivalents, as of March 30, 2024.

Our $1,021.2 million of total cash and cash equivalents as of March 29, 2025, includes $848.7 million held by our foreign subsidiaries, of which $665.2 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.

We may, from time to time, seek to retire or make additional optional payments on our outstanding debt obligations through repurchases or exchanges of our outstanding notes, which may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. Such tenders, exchanges, purchases, or other transactions, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Credit Agreement

On April 23, 2024, we entered into a five-year unsecured senior credit facility pursuant to a credit agreement with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer and a syndicate of lenders (the “Credit Agreement”), which replaced our previous credit agreement. The Credit Agreement provides for a $325.0 million senior revolving line of credit (the “Revolving Facility”). Up to $25.0 million of the Revolving Facility may be used for the issuance of standby letters of credit, and up to $10.0 million of the Revolving Facility may be used for swing line advances (i.e., short-term borrowings made available from the lead lender). We may request at any time that the Revolving Facility be increased by up to $325.0 million, subject to securing additional funding commitments from existing or new lenders. The Revolving Facility is available to finance working capital, capital expenditures and other lawful corporate purposes. During fiscal 2025, there were no borrowings under the Revolving Facility.

The Credit Agreement contains various conditions, covenants and representations with which we must be in compliance in order to borrow funds and to avoid an event of default. As of March 29, 2025, we were in compliance with these covenants. Refer to Note 9 of the Notes to Consolidated Financial Statements for further information about the Credit Agreement.

Stock Repurchases

On November 2, 2022, 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 the remaining authorized dollar amount under a prior program terminated concurrent with the new authorization. Under this program, share repurchases are made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which we repurchase our shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The program does not require us to repurchase a minimum number of shares, does not have a fixed term, and may be modified, suspended or terminated at any time without prior notice.

During fiscal years 2025, 2024 and 2023, we repurchased approximately 4.0 million shares, 4.0 million shares and 8.7 million shares of our common stock, respectively, for approximately $358.8 million, $403.0 million and $862.2 million, respectively (including transaction costs and excise tax, as applicable) under the prior and current share repurchase programs. As of March 29, 2025, approximately $948.7 million remains authorized for repurchases under the current share repurchase program.

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Cash Flows from Operating Activities

Operating activities in fiscal 2025 generated cash of $622.2 million, compared to $833.2 million in fiscal 2024. This decrease in cash provided by operating activities was primarily due to changes in working capital. The decrease was also attributable to lower profitability when adjusted for non-cash items (which includes depreciation, intangible assets amortization, deferred income taxes, asset impairments, goodwill and intangible asset impairment, stock-based compensation expense and other non-cash items).

Cash Flows from Investing Activities

Net cash provided by investing activities in fiscal 2025 was $36.6 million, compared to net cash used in investing activities of $136.5 million in fiscal 2024. During fiscal 2025, we received net cash proceeds of $117.5 million from the divestiture of our SiC power device business and we received net cash proceeds of $55.6 million from the divestiture of our assembly and test operations in China. During fiscal 2024, we received proceeds of $49.5 million, primarily from the sale of our BAW manufacturing facility in Farmers Branch, Texas. Additionally, we acquired Anokiwave in fiscal 2024, resulting in net cash outflows of $83.0 million.

Cash Flows from Financing Activities

Net cash used in financing activities in fiscal 2025 was $684.4 million, compared to net cash used in financing activities of $459.6 million in fiscal 2024. During fiscal 2025, we received net proceeds of $130.2 million from Luxshare for inventory (subject to repurchase) in connection with our supply agreement (refer to Note 4 of the Notes to Consolidated Financial Statements for additional information), and we repaid $439.1 million of the principal amount of our 2024 Notes, which matured in December 2024. During fiscal 2024, we repurchased $58.3 million of the principal amount of our 2024 Notes.

Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including market acceptance of and demand for our products, acquisition opportunities, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flows from operations, coupled with our existing cash and cash equivalents and availability from the Revolving Facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if there is a significant decrease in demand for our products, or if investments in our business outpace revenue growth, operating cash flows may be insufficient to meet our needs. If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. Additional debt or equity financing could be dilutive to holders of our common stock. Further, we cannot be sure that additional debt or equity financing, if required, will be available on favorable terms, if at all.

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CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations and commitments (in thousands) as of March 29, 2025, and the effect such obligations are expected to have on our liquidity and cash flows in future periods:

(1) Capital commitments represent obligations for the purchase of equipment and software, a majority of which are not recorded as liabilities in our Consolidated Balance Sheet because we had not received the related goods or services as of March 29, 2025.

(2) Purchase obligations represent payments due related to the purchase of materials and manufacturing services, a majority of which are not recorded as liabilities in our Consolidated Balance Sheet because we had not received the related goods or services as of March 29, 2025.

(3) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2029 Notes and the 2031 Notes, including anticipated interest payments not recorded as liabilities in our Consolidated Balance Sheet as of March 29, 2025. Debt obligations are presented based on their stated maturity date, and any future redemptions would impact our cash payments. Refer to Note 9 of the Notes to Consolidated Financial Statements for further information.

Other Contractual Obligations

As of March 29, 2025, in addition to the amounts shown in the contractual obligations table above, we have $49.5 million of unrecognized income tax benefits and accrued interest and penalties which have been recorded as a liability. We are uncertain as to if, or when, such amounts may be settled.

As discussed in Note 10 of the Notes to Consolidated Financial Statements, we have two pension plans in Germany with a combined benefit obligation of approximately $9.2 million as of March 29, 2025. Pension benefit payments are not included in the schedule above due to the uncertainty regarding the amount and timing of any future cash outflows. Pension benefit payments were approximately $0.4 million in fiscal 2025 and are expected to be approximately $0.4 million in fiscal 2026.

We also offer a non-qualified deferred compensation plan to eligible participants to defer and invest a specified percentage of their cash compensation. We record an obligation under the plan for the distributions to be made to participants upon certain triggering events. Although participants are required to make distribution elections at the time of enrollment, the amount and timing of any future cash outflows is uncertain until such triggering events occur. The total deferred compensation obligation as of March 29, 2025 was $58.4 million, of which $2.9 million is estimated to be paid in fiscal 2026. Refer to Note 10 of the Notes to Consolidated Financial Statements for further information.

SUPPLEMENTAL PARENT AND GUARANTOR FINANCIAL INFORMATION

In accordance with the indentures governing the 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 certain of our U.S. subsidiaries (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. (the "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").

The following presents summarized financial information for the Parent and the Guarantors on a combined basis as of and for the periods indicated, after eliminating (i) intercompany transactions and balances among the Parent and the Guarantors, and (ii) equity earnings from, and investments in, any Non-Guarantor. The summarized financial

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information may not necessarily be indicative of the financial position and results of operations had the combined Parent and Guarantors operated independently from the Non-Guarantors.

(1) Includes net amounts due from Non-Guarantor subsidiaries of $259.4 million and $129.8 million as of March 29, 2025 and March 30, 2024, respectively.

(2) Includes net amounts due to Non-Guarantor subsidiaries of $687.6 million and $597.3 million as of March 29, 2025 and March 30, 2024, respectively.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements requires management to use judgment and estimates. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results could materially differ from those estimates. The accounting policies that are most critical in the preparation of our consolidated financial statements are those that are both important to the presentation of our financial condition and results of operations and require significant judgment and estimates on the part of management. Our critical accounting policies are reviewed periodically with the Audit Committee of the Board of Directors. We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. Refer to Note 1 of the Notes to Consolidated Financial Statements.

Inventory Reserves. The valuation of inventory requires us to estimate obsolete or excess inventory. The determination of obsolete or excess inventory requires us to estimate the future demand for our products within specific time horizons, generally 24 months. The estimates of future demand that we use in the valuation of inventory reserves are the same as those used in our revenue forecasts and are also consistent with the estimates used in our manufacturing plans to enable consistency between inventory valuations and build decisions. Product-specific facts and circumstances reviewed in the inventory valuation process include a review of the customer base, market conditions and customer acceptance of our products and technologies, as well as an assessment of the selling price in relation to the product cost. Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted.

These valuations and estimates require significant judgment. If actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations.

Business Acquisitions. We allocate the fair value of the purchase price to the assets acquired and liabilities assumed based on their estimated fair value. The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded to goodwill. Goodwill is assigned to the reporting unit that is expected to benefit from the synergies of the business combination.

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A number of significant assumptions, estimates and judgments are used in determining the fair value of acquired assets and liabilities, particularly with respect to the intangible assets acquired. The valuation of intangible assets requires the use of valuation techniques such as the income approach. The income approach includes management’s estimation of future cash flows (including expected revenue growth rates and profitability), the underlying product or technology life cycles and the discount rates applied to future cash flows.

Judgment is also required in estimating the fair values of deferred tax assets and liabilities, uncertain tax positions and tax-related valuation allowances, which are initially estimated as of the acquisition date, as well as inventory, property and equipment, pre-existing liabilities or legal claims, deferred revenue and contingent consideration, each as may be applicable.

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any purchase price adjustments are recorded to the income statement.

Goodwill Impairment Testing. In accordance with ASC 350, “Intangibles – Goodwill and Other,” goodwill is not amortized but is subject to impairment testing at least annually or when an event occurs or circumstances change that indicate it is more likely than not an impairment exists. Management tests goodwill for impairment at the reporting unit level.

As required by our policy, goodwill is tested for impairment on the first day of our fourth quarter of each fiscal year, or when there is evidence that events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may first assess qualitative factors for each reporting unit to determine whether it is necessary to perform a quantitative goodwill impairment test. In performing qualitative assessments, we consider the following factors which could trigger a goodwill impairment review: (i) significant underperformance relative to historical or projected future operating results; (ii) significant changes in the manner or our use of the acquired assets or the strategy for our overall business; (iii) significant negative industry or economic trends; (iv) a significant decline in our stock price for a sustained period; and (v) a significant change in our market capitalization relative to our net book value.

Our quantitative assessments generally consider both the income and market approaches to estimate the fair value of each reporting unit. Inherent in the fair value determinations are significant judgments and estimates, including assumptions about future revenue, profitability and cash flows, discount rates used to determine the present value of future cash flows, our operational plans and our interpretation of current economic indicators and market valuations. The income approach is based on the discounted cash flow method that uses estimates of the reporting units’ revenue growth rates and operating margins as part of our long-term planning process, taking into consideration historical data and industry and market conditions. The discount rate used to determine the present value of future cash flows is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics.

If the carrying value of a reporting unit (including the value of goodwill) is greater than its estimated fair value, an impairment charge would be recorded for the amount that the carrying amount of the reporting unit exceeded its fair value, up to the total amount of goodwill allocated to that reporting unit.

In the second quarter of fiscal 2025, our decision to sell our SiC power device business (a reporting unit within the HPA segment) resulted in a goodwill impairment charge of approximately $96.5 million, representing the entire goodwill of this reporting unit.

Our fiscal 2025 annual assessment was performed using a qualitative approach as of the first day of our fourth quarter (December 29, 2024) on our five reporting units with a remaining goodwill balance. Based on our fiscal 2025 qualitative assessment, we concluded there were no events or circumstances that indicated it was more likely than not that the fair value of each reporting unit was less than its respective carrying value. Subsequently in March 2025, we revised the long-term forecasts for our MEMS-based sensing solutions business due to slower than

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expected market adoption of this technology into mobile handsets as compared to previous assumptions. As part of ongoing efforts to focus on opportunities that align with long-term profitability objectives, we began to seek strategic alternatives related to our MEMS-based sensing solutions business, which constitutes a reporting unit within the CSG segment. Given the future funding requirements necessary to further develop these solutions and achieve the desired results, we decided not to invest further in this business. Therefore, we determined that there was a more-likely-than-not expectation of divesting this reporting unit, and impairment testing was triggered. The impairment testing resulted in a goodwill impairment charge of approximately $47.8 million, representing the entire remaining goodwill of this reporting unit.

Refer to Note 6 of the Notes to Consolidated Financial Statements for additional information regarding our goodwill.

Identified Intangible Assets. We amortize definite-lived intangible assets (including developed technology, customer relationships, technology licenses and trade names) on a straight-line basis over their estimated useful lives. Upon completion of development, in-process R&D assets are transferred to developed technology and are amortized over their useful lives. The asset balances relating to abandoned projects are impaired and expensed to R&D.

We evaluate definite-lived intangible assets for impairment to determine whether facts and circumstances indicate that the carrying amount of the assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amounts over the fair value of those assets and occur in the period in which the impairment determination was made. When measuring impairment, we make significant assumptions and apply judgment in estimating future cash flows and asset fair values, including annual revenue growth rates and a terminal year growth rate that reflects the inherent risk in future cash flows. If actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations.

In the second quarter of fiscal 2025, our decision to sell our SiC power device business (a reporting unit within the HPA segment) resulted in an intangible asset impairment charge of $16.6 million. In March 2025, we revised the long-term forecasts for our MEMS-based sensing solutions business due to slower than expected market adoption of this technology into mobile handsets as compared to previous assumptions. As part of ongoing efforts to focus on opportunities that align with long-term profitability objectives, we began to seek strategic alternatives related to our MEMS-based sensing solutions business. Given the future funding requirements necessary to further develop these solutions and achieve the desired results, we decided not to invest further in this business. Therefore, we determined that there was a more-likely-than-not expectation of divesting this reporting unit, and impairment testing was triggered. The impairment testing resulted in an intangible asset impairment charge of approximately $31.7 million.

Refer to Note 6 of the Notes to Consolidated Financial Statements for additional information regarding our identified intangible assets.

Revenue Recognition. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services. A majority of our revenue is recognized at a point in time, either on shipment or delivery of the product, depending on individual customer terms and conditions.

We apply a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Our revenue recognition accounting methodology contains uncertainties because it requires us to make significant estimates and assumptions and to apply judgment. For example, for arrangements that have multiple performance obligations, we must exercise judgment and use estimates in order to (1) determine whether performance obligations are distinct and should be accounted for separately; (2) determine the stand-alone selling price of each performance obligation; (3) allocate the transaction price among the various performance obligations on a relative stand-alone

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selling-price basis; and (4) determine whether revenue for each performance obligation should be recognized at a point in time or over time.

If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.

Refer to Note 1 of the Notes to Consolidated Financial Statements for a complete discussion of our revenue recognition policies.

Income Taxes. In determining income for financial statement purposes, we must make certain estimates and judgments in the calculation of tax expense, the resultant tax liabilities and the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.

We assess the likelihood that our deferred tax assets can be recovered, recording a reserve in the form of a valuation allowance if the deferred tax assets are ultimately estimated to not be recoverable. In this process, certain relevant criteria are evaluated including: the amount of income or loss in prior years, the existence of deferred tax liabilities that can be used to absorb deferred tax assets, the taxable income in prior carryback years that can be used to absorb net operating losses and credit carrybacks, future expected taxable income and prudent and feasible tax planning strategies. Changes in taxable income, market conditions, U.S. or international tax laws and other factors may change our judgment regarding whether we will be able to realize the deferred tax assets. These changes, if any, may require material adjustments to the net deferred tax assets and an accompanying reduction or increase in income tax expense which will result in a corresponding increase or decrease in net income in the period when such determinations are made. Refer to Note 13 of the Notes to Consolidated Financial Statements for additional information regarding changes in the valuation allowance and net deferred tax assets.

We also assess the likelihood that our tax reporting positions will ultimately be sustained. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion, or all, of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our tax reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which will result in a corresponding increase or decrease in net income in the period when such determinations are made. Refer to Note 13 of the Notes to Consolidated Financial Statements for additional information regarding our uncertain tax positions and the amount of unrecognized tax benefits.