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Government Incentives | 12 Months Ended
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Aug. 28, 2025
Government Assistance [Abstract] |
Government Incentives | Government Incentives We receive incentives from governmental entities primarily in India, Japan, Singapore, and the United States principally in the form of cash grants and tax credits. These incentives primarily relate to capital expenditures and may be subject to reimbursement if certain conditions are not met or maintained. The conditions attached to these incentives require us to incur expenditures related to the construction of new manufacturing facilities, the purchase and installation of specialized tools and equipment, R&D expenditures, meet and/or maintain operational metrics, and/or maintain certain levels of fixed asset investment or employee headcount during the incentive terms. Government incentives related to capital expenditures have reduced property, plant and equipment by $5.04 billion as of August 28, 2025, of which $3.11 billion pertained to 2025 expenditures. In 2025, operating income (loss) benefited by $588 million (approximately 87% in COGS and 13% in R&D) from government incentives that reduced depreciation expense and operating incentives, which offset against the related expense in the period the expense was incurred. The line items on the balance sheet affected by government incentives were as follows:
As of | August 28, 2025
Receivables | $ | 1,572 |
Other noncurrent assets | 914 |
Noncurrent unearned government incentives | 1,018 |
In addition to the receivables and other noncurrent assets in the table above and cash incentives already received, we had the following commitments from various governmental entities, subject to achievement of certain performance conditions:
As of | August 28, 2025
U.S. | $ | 5,206 |
India | 1,491 |
Japan | 929 |
Singapore | 269 |
Other | 10 |
| $ | 7,905 |
U.S. CHIPS Act Funding Agreements On December 9, 2024, we entered into direct funding agreements with the U.S. Department of Commerce for up to $6.1 billion in direct funding pursuant to the CHIPS Act for a planned fab in Boise, Idaho and two planned fabs in Clay, New York. On June 11, 2025, we entered into amendments to the direct funding agreements to add a second planned fab in Boise, Idaho and allocated certain award funding from the $6.1 billion grants previously awarded to the second planned Idaho fab. The direct funding for up to $6.1 billion remains unchanged. On June 11, 2025, we also entered into a direct funding agreement with the U.S. Department of Commerce for up to $275 million in direct funding for our fab in Manassas, Virginia. The direct funding agreement for our fab in Virginia is substantially similar to those for our fabs in Idaho and New York. The grants under the funding agreements represent total CHIPS Act grants of up to $6.4 billion in connection with our U.S. manufacturing expansion and modernization projects. Funding will be based on the achievement of construction, tool installation, and wafer production milestones. We retain discretion with respect to capacity and production volume ramp of each project. The agreements contain representations, warranties, and covenants that relate to compliance with requirements for awards provided for in the CHIPS Act. In addition, the agreements include certain events of default and related rights and remedies, including clawbacks related to the failure to complete a project by an agreed upon completion date, violation of CHIPS Act restrictions on certain activities involving foreign countries and entities of concern, and impermissible use or disposition of a project. We are permitted to make customary and ordinary course recurring dividends (and reasonable ordinary course increases thereof) consistent with our past practice. There are restrictions on our payment of special and one-time dividends during the five-year period following the Idaho and New York award date of December 9, 2024. Share repurchases are permitted during the first two years of such five-year period up to amounts specified in the funding agreements to help offset the dilutive effects of employee stock compensation or as otherwise permitted by the U.S. Department of Commerce. Share repurchases are not restricted during the final three years of such five-year period if certain financial and other conditions are satisfied. We may be required to pay upside sharing amounts for a period of up to ten years following the first year in which the cumulative cash flow from a project is positive, if cumulative cash flows from the project exceed a threshold level that is at a significant premium to the baseline projection. The upside sharing amount would equal a modest sharing percentage of the excess cash flows above the threshold level, but not to exceed 75% of award disbursements for a project, after considering any clawbacks or other repayments. In addition to the U.S. commitment amount in the table above, we receive an investment tax credit on qualified investments in U.S. semiconductor manufacturing under the CHIPS Act. On July 4, 2025, the One Big Beautiful Bill Act was enacted, which increased the investment tax credit from 25% to 35% on qualified investments placed into service after December 31, 2025. As qualified investments are made, we recognize investment tax credits in receivables or other noncurrent assets. We have also signed a non-binding term sheet with the state of New York that provides up to $5.5 billion in funding for the planned four-fab facility over the next 20-plus years through a combination of tax credits for qualified capital investments and incentives for eligible new job wages. Other Government Incentive Commitments We receive incentives for the construction of a new assembly and test facility in Gujarat, India, representing 50% of the total project cost from the Indian central government and 20% of the total project cost from the state of Gujarat. We also receive incentives from the Japanese Ministry of Economy, Trade and Industry to support the production of DRAM using EUV lithography in Hiroshima, Japan. Subsequent to August 28, 2025, we finalized a new incentive arrangement with the Japanese Ministry of Economy, Trade and Industry to modernize our Hiroshima, Japan manufacturing facility for an additional commitment amount of up to 500 billion Japanese yen (approximately $3.4 billion).

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