What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-10-07 compared with 2021-10-08 · 93 added, 74 removed, 179 unchanged (48% of the section changed)

3 unchanged sentences

Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31.

Fiscal 2021 contained 52 weeks, fiscal 2020 contained 53 weeks, and fiscal 2019 contained 52 weeks.

Fiscal 2022 and 2021 contained 52 weeks and fiscal 2020 contained 53 weeks.

Our fourth quarter of fiscal 2020 contained 14 weeks and all other fiscal quarters in the years presented contained 13 weeks .

25 unchanged sentences

Net income attributable to Micron $ 8,687 28 % $ 5,861 21 % $ 2,687 13 %

43 | 2022 10-K

Total Revenue:

Total revenue for 2021 increased 29% as compared to 2020 primarily due to increases in DRAM and NAND sales.

Sales of DRAM products for 2021 increased 38% as compared to 2020 primarily due to growth in

bit shipments in the high-20% range and a high single-digit percent increase in average selling prices.

Sales of NAND products for 2021 increased 14% as compared to 2020 primarily due to increases in bit shipments in the high-20% range, partially offset by a low-10% range decline in average selling prices.

In the first quarter of 2022, we expect that our bit shipments may be adversely impacted as some customers are adjusting their memory and storage purchases due to shortages of non-memory components and due to constraints within our supply chain for certain IC components.

Total revenue for 2020 decreased 8% as compared to 2019 primarily due to a decline in DRAM sales partially offset by an increase in NAND sales.

Sales of DRAM products for 2020 decreased 14% as compared to 2019 as average selling prices declined in the mid-30% range due to challenging market conditions, partially offset by growth in bit shipments in the low-30% range driven by cloud server, enterprise server, and mobile markets.

Sales of NAND products for 2020 increased 14% as compared to 2019 primarily due to increases in bit shipments in the mid-20% range driven by sales of SSDs to data center customers and sales of managed NAND products, partially offset by a high-single-digit percent decline in average selling prices.

Overall Gross Margin :

Our overall gross margin percentage increased to 38% for 2021 from 31% for 2020, primarily due to the increases in DRAM average selling prices and cost reductions resulting from strong execution in delivering products featuring advanced technologies, partially offset by the declines in NAND average selling prices.

Our gross margins included the impact of underutilization costs at MTU of $335 million for 2021, $557 million for 2020, and $384 million for 2019.

Underutilization costs at MTU declined in 2021 primarily due to the plan to sell MTU’s Lehi facility and classification of assets as held for sale at the end of the second quarter of 2021, which resulted in the cessation of depreciation on those assets (See “Item 8.

Total revenue for 2022 increased 11% as compared to 2021 primarily due to increases in sales of both DRAM and NAND products.

• Sales of DRAM products increased 12% primarily due to increases in bit shipments of slightly over 10%.

• Sales of NAND products increased 11% primarily due to a high-single-digit percent increase in bit shipments and a low-single-digit percent increase in average selling prices.

In the fourth quarter of 2022, the memory and storage industry environment deteriorated sharply due to global and macroeconomic challenges combined with downward inventory adjustments by customers, leading to significant reductions in bit shipments and average selling prices for both DRAM and NAND resulting in a 23% decline in revenue as compared to the third quarter of 2022.

For the first quarter of 2023, continuation of these challenging conditions and inventory adjustments by customers have resulted in further reductions in near-term demand for both DRAM and NAND and we expect bit shipments and pricing to decline as compared to the fourth quarter of 2022.

Total revenue for 2021 increased 29% as compared to 2020 primarily due to increases in sales of both DRAM and NAND products.

• Sales of DRAM products increased 38% primarily due to growth in bit shipments in the high-20% range and a high single-digit percent increase in average selling prices.

• Sales of NAND products increased 14% primarily due to increases in bit shipments in the high-20% range, partially offset by a decline in average selling prices of slightly over 10%.

Consolidated Gross Margin :

Our consolidated gross margin percentage increased to 45% for 2022 from 38% for 2021, as a result of improvements in margins for both DRAM and NAND products, primarily due to reductions in manufacturing costs.

Manufacturing cost reductions were driven by strong execution in ramping our 1α DRAM and 176-layer NAND technology nodes.

Our consolidated gross margin percentage declined to 39% in the fourth quarter of 2022 from 47% in the third quarter of 2022 and we expect that in the first quarter of 2023 the percentage will decline further due to decreases in average selling prices as a result of the challenging industry environment for memory and storage products.

To address our elevated inventory levels and reduce supply growth, in the first quarter of 2023, we are selectively reducing facility utilization in both DRAM and NAND.

We also expect that inflationary pressure will continue to be a headwind to costs in the first quarter of 2023.

Our consolidated gross margin percentage increased to 38% for 2021 from 31% for 2020, primarily due to the increases in DRAM average selling prices and cost reductions resulting from strong execution in delivering products featuring advanced technologies, partially offset by declines in NAND average selling prices.

Our gross margins included the impact of underutilization costs at MTU of $335 million for 2021 and $557 million for 2020.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Lehi, Utah Fab and 3D XPoint.”

2 unchanged sentences

These changes resulted in a one-time increase to cost of goods sold of approximately $293 million in 2021.

Our overall gross margin percentage decreased to 31% for 2020 from 46% for 2019, primarily due to declines in average selling prices, partially offset by the effect of decreases in non-cash depreciation expense from the revision in estimated useful lives of equipment in our NAND wafer fabrication facilities, cost reductions resulting from strong execution in delivering products featuring advanced technologies, and continuous improvement initiatives to reduce production costs.

Based on our assessment of planned technology node transitions, capital spending, and re-use rates, we revised the estimated useful lives of the existing equipment in our NAND wafer fabrication facilities and our research and development facilities from five years to seven years as of the beginning of the first quarter of 2020.

The revision in estimated useful lives reduced NAND manufacturing depreciation expense and benefited cost of goods sold by approximately $400 million for 2020.

Revenue by Business Unit

2 unchanged sentences

MBU 7,260 24 % 7,203 26 % 5,702 27 %

SBU 3,973 14 % 3,765 18 % 3,826 16 %

EBU 5,235 17 % 4,209 15 % 2,759 13 %

SBU 4,553 15 % 3,973 14 % 3,765 18 %

All Other 17 — % 40 — % 25 — %

2 unchanged sentences

Changes in revenue for each business unit for 2022 as compared to 2021 were as follows:

• CNBU revenue increased 12% primarily due to increases in bit shipments to cloud, enterprise, and networking markets.

• MBU revenue was relatively unchanged as both DRAM and NAND revenue was relatively flat.

• EBU revenue increased 24% primarily due to strong demand growth in industrial and automotive markets.

• SBU revenue increased 15% primarily due to higher average selling prices and increases in shipments of SSD products.

Changes in revenue for each business unit for 2021 as compared to 2020 were as follows:

• CNBU revenue increased 34% primarily due to broad-based increases in bit shipments across markets and higher average selling prices for DRAM.

• MBU revenue increased 26% primarily due to increases in bit shipments for high-value mobile MCP products.

40 | 2021 10-K

• SBU revenue increased 6% as increases in bit shipments for NAND products outpaced declines in average selling prices.

• EBU revenue increased 53% primarily due to increases in bit shipments driven by strong demand growth in automotive, industrial, and consumer markets and improved pricing in industrial and consumer markets.

Changes in revenue for each business unit for 2020 as compared to 2019 were as follows:

• CNBU revenue decreased 8% primarily due to DRAM price declines driven by imbalances in supply and demand, partially offset by bit sales growth across key markets, particularly in the cloud server and graphics markets.

In addition, in the second quarter of 2020, we determined that the 3D XPoint technology and product roadmap were more closely aligned with our CNBU strategy than our SBU strategy and 3D XPoint became an integral part of CNBU.

Accordingly, we began to report all 3D XPoint activities within CNBU from that date.

• MBU revenue decreased 11% primarily due to price declines, partially offset by bit sales growth for high-value mobile MCP products.

• SBU revenue decreased 2% primarily due to the decline in 3D XPoint revenue in SBU after the first quarter of 2020 as noted above and NAND selling price declines, partially offset by bit sales growth for SSDs.

SBU revenue included products manufactured and sold to Intel under a long-term supply agreement at prices approximating cost, which included 3D XPoint memory and NAND, aggregating $124 million for 2020 and $682 million for 2019.

• EBU revenue decreased 12% primarily due to price declines resulting from the impact of the global COVID-19 pandemic on automotive, industrial, and consumer segments partially offset by bit sales growth from transitions to an increasing mix of high-density DRAM and NAND products.

• SBU revenue increased 6% as increases in bit shipments for NAND products outpaced declines in average selling prices.

Operating Income (Loss) by Business Unit

2 unchanged sentences

MBU 2,160 30 % 2,173 30 % 1,074 19 %

SBU 173 4 % 36 1 % (386) (10) %

EBU 1,752 33 % 1,006 24 % 301 11 %

SBU 513 11 % 173 4 % 36 1 %

All Other 12 71 % 20 50 % (2) (8) %

2 unchanged sentences

Changes in operating income or loss for each business unit for 2022 as compared to 2021 were as follows:

• CNBU operating income increased primarily due to higher bit shipments and manufacturing cost reductions.

• MBU operating income was relatively unchanged as slight increases in gross margins were offset by higher operating expenses.

• EBU operating income increased primarily due to manufacturing cost reductions from an increasing mix of leading-edge bits, higher bit shipments, and improved DRAM pricing in industrial and consumer markets, partially offset by higher R&D expenses.

• SBU operating income increased primarily due to improved product mix driving increases in average selling prices, increases in SSD shipments, and manufacturing cost reductions, partially offset by higher R&D expenses.

45 | 2022 10-K

Changes in operating income or loss for each business unit for 2021 as compared to 2020 were as follows:

• CNBU operating income increased primarily due to increases in bit shipments, higher average selling prices, manufacturing cost reductions, and lower MTU underutilization costs.

• MBU operating income increased primarily due to increases in sales of high-value MCP products, manufacturing cost reductions for low-power DRAM, and increases in DRAM bit shipments.

• SBU operating income increased primarily due to lower manufacturing costs and increases in bit shipments, partially offset by decreases in selling prices and higher R&D costs.

• EBU operating income increased primarily due to improved pricing in industrial and consumer markets, cost reductions from an increasing mix of leading-edge bits, and higher bit shipments.

Changes in operating income or loss for each business unit for 2020 as compared to 2019 were as follows:

• CNBU operating income decreased primarily due to declines in DRAM pricing and MTU underutilization costs in 2020 related to 3D XPoint.

• MBU operating income decreased primarily due to declines in low-power DRAM and NAND pricing, partially offset by increases in sales of high-value MCP products and manufacturing cost reductions.

• SBU operating margin improved primarily due to lower 3D XPoint underutilization costs, manufacturing cost reductions, increases in sales volumes, and improved product mix, partially offset by declines in selling prices.

• EBU operating income decreased as a result of declines in pricing, partially offset by increases in sales volumes to the automotive and industrial markets.

• SBU operating income increased primarily due to lower manufacturing costs and increases in bit shipments, partially offset by decreases in selling prices and higher R&D costs.

Operating Expenses and Other

4 unchanged sentences

R&D expenses can vary significantly depending on the timing of product qualification.

R&D expenses for 2022 increased 17% as compared to 2021 primarily due to higher employee compensation from increases in headcount, higher volumes of development and prequalification wafers, and higher depreciation expense.

R&D expenses for 2021 increased 2% as compared to 2020 primarily due to increases in employee compensation and depreciation expense resulting from higher capital spending, partially offset by lower volumes of development and prequalification wafers.

R&D expenses for 2020 were 7% higher as compared to 2019 primarily due to increases in volumes of development and pre-qualification wafers, a reduction of R&D reimbursements from our partners, increases in employee compensation, and increases in subcontractor expense, partially offset by lower depreciation expense from the revision of the estimated useful lives of equipment.

Selling, General, and Administrative:

SG&A expenses for 2022 were 19% higher as compared to 2021 primarily due to increases in employee compensation, professional services, and legal fees.

SG&A expenses for 2021 were relatively unchanged as compared to 2020.

SG&A expenses for 2020 were 5% higher as compared to 2019 due to increases in employee compensation and legal costs, partially offset by a reduction in consulting fees.

Restructure and Asset Impairments:

In 2021, we ceased development of 3D XPoint technology and classified our Lehi facility assets as held for sale.

We recognized a restructure charge of $435 million to write down the assets held for sale to the expected consideration to be received under our agreement with TI.

In the first quarter of 2022, we sold our Lehi, Utah facility to TI.

In 2021, the Lehi facility was classified as held for sale and we recognized a restructure charge of $435 million to write down the assets held for sale to the expected consideration to be received under our agreement with TI.

For further discussion see “Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Lehi, Utah Fab and 3D XPoint.”

Other Operating and Non-Operating Income (Expense) :

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Other Operating (Income) Expense, Net” and “ – Other Non-Operating Income (Expense), Net.”

Interest Income (Expense) :

Net interest expense for 2021 increased by $66 million as compared to 2020 primarily due a decrease of $77 million in interest income as a result of decreases in interest rates on our cash and investments.

Net interest expense for 2020 was $80 million, as compared to $77 million of net interest income for 2019 (a change of $157 million), primarily due to (1) a $91 million decrease in interest income as a result of decreases in interest rates, partially offset by higher average levels of cash and investment balances and (2) a $66 million increase in interest expense primarily due to an increase in our average debt outstanding and a reduction in the amount of interest expense capitalized in 2020.

Net interest expense for 2022 decreased by $53 million as compared to 2021 primarily due to an increase of $59 million in interest income as a result of increases in interest rates on our cash and investments.

Net interest expense for 2021 increased by $66 million as compared to 2020 primarily due to a decrease of $77 million in interest income as a result of decreases in interest rates on our cash and investments.

Income Taxes:

4 unchanged sentences

Effective tax rate 9.3 % 6.3 % 9.4 %

Our effective tax rate decreased in 2021 as compared to 2020 primarily as a result of a $104 million tax benefit recorded for the discrete $435 million charge to write down the Lehi assets held for sale to the estimated consideration to be realized from the sale of these assets, less expected selling costs.

Other changes to our effective tax rate in the periods presented were primarily due to the geographic mix of our earnings.

Our income tax provision decreased in 2020 as compared to 2019 primarily as a result of reductions in our profit before tax.

Our effective tax rate increased in 2022 as compared to 2021 primarily due to the geographic mix of our earnings and a valuation allowance recorded against our Idaho deferred tax assets of $189 million, partially offset by tax impacts of changes in foreign currency exchange rates.

We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements.

These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds.

The effect of tax incentive

42 | 2021 10-K

arrangements reduced our tax provision by $758 million (benefiting our diluted earnings per share by $0.66) for 2021, by $215 million ($0.19 per diluted share) for 2020, and by $756 million ($0.66 per diluted share) for 2019.

The effect of tax incentive arrangements reduced our tax provision by $1.12 billion (benefiting our diluted earnings per share by $1.00) for 2022, by $758 million ($0.66 per diluted share) for 2021, and by $215 million ($0.19 per diluted share) for 2020.

Beginning in 2023, provisions in the Tax Cuts and Jobs Act of 2017 will require us to capitalize and amortize R&D expenditures rather than deducting the costs as incurred.

Unless the effective date is deferred or the law is repealed, we expect an increase to our effective tax rate for several years.

In addition, the mix of our income, together with U.S.

and foreign tax rules, results in taxes becoming more fixed at lower profitability levels.

As a result of these factors, we estimate tax expense of at least $300 million for 2023.

Beyond this level, our actual tax expense will depend on the level of operating income through the year.

Beginning in 2024, the Inflation Reduction Act of 2022 imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement income exceeding $1 billion.

We are in the process of assessing whether the book minimum tax would impact our effective tax rate.

Various tax reforms are being considered in multiple jurisdictions that, if enacted, contain provisions that could increase our tax expense.

We continue to monitor the potential impact of these various tax reform proposals to our overall global effective tax rate and financial statements.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Income Taxes.”

Further information can be found in “Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Other Operating (Income) Expense, Net”;

“ – Other Non-Operating Income (Expense), Net”;

and other notes to the financial statements.

Liquidity and Capital Resources

1 unchanged sentence

Cash generated from operations is highly dependent on selling prices for our products, which can vary significantly from period to period.

We are continuously evaluating alternatives for efficiently funding our capital expenditures and ongoing operations.

We expect, from time to time, to engage in a variety of financing transactions for such purposes, including the issuance of securities.

As of September 2, 2021, $2.50 billion was available to draw under our Revolving Credit Facility.

We expect to receive $900 million of proceeds from the sale of our Lehi facility to TI in the first quarter of 2022.

Cash and marketable investments totaled $10.98 billion as of September 1, 2022, and $10.40 billion as of September 2, 2021.

Our investments consist primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, which are diversified among industries and individual issuers.

Our cash and investments consist primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, which are diversified among industries and individual issuers.

To mitigate credit risk, we invest through high-credit-quality financial institutions and by policy generally limit the concentration of credit exposure by restricting the amount of investments with any single obligor.

As of September 1, 2022, $3.79 billion of our cash and marketable investments was held by our foreign subsidiaries.

We are continuously evaluating alternatives for efficiently funding our capital expenditures and ongoing operations.

We expect, from time to time, to engage in a variety of financing transactions for such purposes, including the issuance of securities.

As of September 1, 2022, $2.50 billion was available to draw under our Revolving Credit Facility.

Funding of certain significant capital projects is also dependent on the receipt of government incentives, which are subject to conditions and may not be obtained.

To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must continue to invest in manufacturing technologies, facilities and equipment, and R&D.

We estimate capital expenditures in 2022 for property, plant, and equipment, net of partner contributions, to be between $11 billion and $12 billion, and we expect the timing of our capital expenditures to be weighted more toward the first half of 2022.

Capital expenditures for 2022 are driven by our continued 176-layer NAND transition, pilot line enablement for next generation NAND and DRAM, and continued infrastructure and prepayments to support the introduction of EUV lithography.

We estimate capital expenditures in 2023 for property, plant, and equipment, net of partner contributions, to be around $8 billion.

Actual amounts for 2023 will vary depending on market conditions.

As of September 1, 2022, we had purchase obligations of approximately $4.04 billion for the acquisition of property, plant, and equipment, of which approximately $2.97 billion is expected to be paid within one year.

For a description of contractual obligations, such as debt, leases, and purchase obligations, see “Item 8.

For a description of other contractual obligations, such as debt, leases, and purchase obligations, see “Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt,” “ – Leases,” and “ – Commitments.”

Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to a Rule 10b5-1 trading plan.

47 | 2022 10-K

To support expected memory demand in the second half of the decade, we will need to add new DRAM wafer capacity.

Following the enactment of the CHIPS Act in 2022, we announced plans to invest in two leading-edge memory manufacturing fabs in the United States, contingent on CHIPS Act support through grants and investment tax credits.

As part of this plan, in September 2022, we broke ground on a leading-edge memory manufacturing fab in Boise, Idaho.

Construction of the fab is expected to begin in calendar 2023 with DRAM production targeted to start in calendar 2025.

In addition, in October 2022, we announced plans to build a second leading-edge DRAM manufacturing fab in Clay, New York.

We plan to start site preparation work in calendar 2023 and expect construction to begin in calendar 2024, with production anticipated to ramp in the latter half of the decade.

We expect these new fabs to fulfill our requirements for additional wafer capacity starting in the second half of the decade and beyond, in line with industry demand trends.

On November 1, 2021, we issued $1 billion in aggregate principal amount of unsecured 2032 Green Bonds.

Over time, we plan to allocate an amount equal to the net proceeds to fund eligible sustainability-focused projects involving renewable energy, green buildings, energy efficiency, water management, waste abatement, and a circular economy.

The repurchase authorization has no expiration date, does not obligate us to acquire any common stock, and is subject to market conditions and our ongoing determination of the best use of available cash.

1 unchanged sentence

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity.”

On August 2, 2021, we announced that our Board of Directors had declared a quarterly dividend of $0.10 per share, payable in cash on October 18, 2021, to shareholders of record as of the close of business on October 1, 2021.

On September 29, 2022, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on October 26, 2022, to shareholders of record as of the close of business on October 11, 2022.

The declaration and payment of any future cash dividends are at the discretion and subject to the approval of our Board of Directors.

Our Board of Directors' decisions regarding the amount and payment of dividends will depend on many factors, such as our financial condition, results of operations, capital requirements, business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory constraints, and other factors that our Board of Directors may deem relevant.

Our Board of Directors' decisions regarding the amount and payment of dividends will depend on many factors, including, but not limited to, our financial condition, results of operations, capital requirements, business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory constraints, and other factors that our Board of Directors may deem relevant.

We expect that our cash and investments, cash flows from operations, and available financing will be sufficient to meet our requirements at least through the next 12 months and thereafter for the foreseeable future.

4 unchanged sentences

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash (106) 41 11

Net increase in cash, cash equivalents, and restricted cash $ 139 $ 411 $ 692

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 510 $ 139 $ 411

Operating Activities :

Cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, asset impairments, and stock-based compensation, and the effects of changes in operating assets and liabilities.

The increase in cash provided by operating activities for 2021 as compared to 2020 was primarily due to higher net income adjusted for non-cash items compared with the prior period and the effect of lower inventories, partially offset by an increase in receivables due to a higher level of sales.

The decrease in cash provided by operating activities for 2020 compared with 2019 was primarily due to lower net income and changes in working capital.

The increase in cash provided by operating activities for 2022 as compared to 2021 was primarily due to higher net income adjusted for non-cash items and the effect of lower receivables, partially offset by an increase in inventories.

The increase in cash provided by operating activities for 2021 as compared to 2020 was primarily due to higher net income adjusted for non-cash items and the effect of lower inventories, partially offset by an increase in receivables due to a higher level of sales.

Investing Activities :

For 2022, net cash used for investing activities consisted primarily of $12.07 billion of expenditures for property, plant, and equipment;

inflows of $115 million of partner contributions for capital expenditures;

$888 million of net inflows from the sale of the Lehi, Utah fab;

and $155 million of net outflows from purchases, sales, and maturities of available-for-sale securities.

For 2021, net cash used for investing activities consisted primarily of $10.03 billion of expenditures for property, plant, and equipment, partially offset by inflows of $502 million of partner contributions for capital expenditures, and $1.06 billion of net outflows from purchases, sales, and maturities of available-for-sale securities.

For 2020, net cash used for investing activities consisted primarily of $8.22 billion of expenditures for property, plant, and equipment, partially offset by inflows of $272 million of partner contributions for capital expenditures, and $415 million of net inflows from purchases, sales, and maturities of available-for-sale securities.

For 2019, net cash used for investing activities consisted primarily of $9.78 billion of expenditures for property, plant, and equipment, partially offset by inflows of $754 million of partner contributions for capital expenditures.

Net cash used for investing activities also included $1.17 billion of net outflows from purchases, sales, and maturities of available-for-sale securities.

Financing Activities :

For 2021, net cash used for financing activities consisted primarily of $1.20 billion for the acquisition of 15.6 million shares of our common stock under our $10 billion share repurchase authorization, $295 million of payments on equipment purchase contracts, $185 million of cash payments to settle conversions of our 2032D Notes, and $147 million of repayments of finance leases and other debt.

For 2022, net cash used for financing activities included $2.43 billion for the acquisition of 35.4 million shares of our common stock under our share repurchase authorization, $2.03 billion of repayments of debt primarily to redeem the 2023 Notes and 2024 Notes, $461 million of cash payments of dividends to shareholders, and $141 million of payments on equipment purchase contracts.

Cash used for financing activities was partially offset by aggregate proceeds of $2.00 billion from the issuance of the unsecured 2032 Green Bonds, 2041 Notes, and 2051 Notes.

For 2021, net cash used for financing activities consisted primarily of $1.20 billion for the acquisition of 15.6 million shares of our common stock under our share repurchase authorization, $295 million of payments on equipment purchase contracts, $185 million of cash payments to settle conversions of our 2032D Notes, and $147 million of repayments of finance leases and other debt.

In addition, we received proceeds of $1.19 billion under an unsecured 2024 Term Loan A and used the proceeds to repay the $1.19 billion Extinguished 2024 Term Loan A.

3 unchanged sentences

Cash used for financing activities was partially offset by proceeds of $2.50 billion from our Revolving Credit Facility, $1.25 billion from the 2023 Notes, and $1.25 billion from the Extinguished 2024 Term Loan A.

For 2019, net cash used for financing activities consisted primarily of $2.66 billion for the acquisition of 67 million shares of treasury stock under our share repurchase authorization and cash payments to reduce our debt, including $1.65 billion to settle conversions of notes, $728 million to prepay the 2022 Term Loan B, $316 million for repayments of IMFT’s debt obligations to Intel, and $643 million for scheduled repayment of other notes and capital leases.

Cash used for financing activities was partially offset by net proceeds of $3.53 billion from the aggregate issuance of the 2024 Notes, 2026 Notes, 2027 Notes, 2029 Notes, and 2030 Notes.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.”

44 | 2021 10-K

Critical Accounting Estimates

2 unchanged sentences

Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances.

Estimates and judgments may vary under different assumptions or conditions.

Estimates and judgments may vary under different assumptions or conditions and involve a significant level of uncertainty.

We evaluate our estimates and judgments on an ongoing basis.

5 unchanged sentences

In accounting for the resolution of contingencies, significant judgment may be necessary to estimate amounts pertaining to periods prior to the resolution that are charged to operations in the period of resolution and amounts related to future periods.

49 | 2022 10-K

We test goodwill for impairment in our fourth quarter each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of the reporting unit with goodwill is less than its carrying value.

4 unchanged sentences

If the carrying value of the reporting unit exceeds its fair value, we would record an impairment loss up to the difference between the carrying value and implied fair value.

For 2021, our qualitative assessment indicated that the fair value for all of our reporting units substantially exceeded their carrying value and that a quantitative assessment was unnecessary.

Our qualitative assessment for the current year indicated that the fair value for all of our reporting units substantially exceeded their carrying value and that a quantitative assessment was unnecessary.

Determining when to test for impairment, the reporting units, the assets and liabilities of the reporting unit, and the fair value of the reporting unit requires significant judgment and involves the use of significant estimates and assumptions.

13 unchanged sentences

Realization of deferred tax assets is dependent on our ability to generate future taxable income.

Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income in Japan, the United States, and other jurisdictions.

Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income in Japan, the United States, Malaysia, and other jurisdictions.

Such forecasts are inherently difficult and involve significant judgments including, among others, projecting future average selling prices and sales volumes, manufacturing and overhead costs, levels of capital spending, and other factors that significantly impact our analyses of the amount of net deferred tax assets that are more likely than not to be realized.

1 unchanged sentence

Inventories are stated at the lower of cost or net realizable value, with cost being determined on a FIFO basis.

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory

costing from average cost to FIFO.

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO.

Cost includes depreciation, labor, material, and overhead costs, including product and process technology costs.

25 unchanged sentences

Recently Adopted Accounting Standards

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Recently Adopted Accounting Standards.”

No material items.

Recently Issued Accounting Standards

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis