Goodwill and Acquired Intangible Assets, Net

9 Months Ended

Oct. 29, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets, Net

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired in a business combination.

In the second quarter of fiscal 2023, the Company purchased IPR&D as well as hired technical staff to expand engineering resources for purchase consideration of $60.1 million of which $40.0 million was allocated to goodwill. In the first quarter of fiscal 2023, the Company completed the acquisition of two semiconductor design services companies located in India, for purchase consideration of $33.7 million, primarily for the purpose of expanding engineering resources to address customer design opportunities, of which $25.8 million was allocated to goodwill. The carrying value of goodwill as of October 29, 2022 and January 29, 2022 is $11.6 billion and $11.5 billion, respectively. See “Note 6 – Business Combinations” for discussion of acquisitions and changes to the carrying value of goodwill.

Acquired Intangible Assets, Net

As of October 29, 2022 and January 29, 2022, net carrying amounts excluding fully amortized intangible assets are as follows (in millions, except for weighted-average remaining amortization period):


	October 29, 2022
	Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amounts		Weighted-Average Remaining Amortization Period (Years)
Developed technologies	$	4,980.0	$	(1,855.7)	$	3,124.3	4.73
Customer contracts and related relationships	2,179.0		(768.6)		1,410.4		4.48

Trade names	66.0		(29.1)		36.9		3.31
Total acquired amortizable intangible assets	$	7,225.0	$	(2,653.4)	$	4,571.6	4.64
IPR&D	801.0		—		801.0		n/a
Total acquired intangible assets	$	8,026.0	$	(2,653.4)	$	5,372.6


	January 29, 2022
	Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amounts		Weighted-Average Remaining Amortization Period (Years)
Developed technologies	$	4,744.1	$	(1,333.7)	$	3,410.4	5.17
Customer contracts and related relationships	2,184.0		(519.6)		1,664.4		5.21
Trade names	73.0		(26.2)		46.8		3.95
Order backlog	70.0		(67.2)		2.8		0.03
Total acquired amortizable intangible assets	$	7,071.1	$	(1,946.7)	$	5,124.4	5.17
IPR&D	1,029.0		—		1,029.0		n/a
Total acquired intangible assets	$	8,100.1	$	(1,946.7)	$	6,153.4

The intangible assets are amortized on a straight-line basis over the estimated useful lives, except for certain Cavium customer contracts and related relationships, which are amortized using an accelerated method of amortization over the expected customer lives, which more closely align with the pattern of realization of economic benefits expected to be obtained. The IPR&D will be accounted for as an indefinite-lived intangible asset and will not be amortized until the underlying projects reach technological feasibility and commercial production at which point the IPR&D will be amortized over the estimated useful life. Useful lives for these IPR&D projects are expected to range between 3 to 10 years. In the event the IPR&D is abandoned, the related assets will be written off.

Amortization expense for acquired intangible assets for the three and nine months ended October 29, 2022 was $269.9 million and $814.2 million, respectively. Amortization expense for acquired intangible assets for the three and nine months ended October 30, 2021 was $279.3 million and $684.6 million, respectively.

The following table presents the estimated future amortization expense of acquired amortizable intangible assets as of October 29, 2022 (in millions):


Fiscal Year	Amount
Remainder of 2023	$	268.3
2024	1,070.4
2025	1,017.8
2026	969.6
2027	818.6
Thereafter	426.9
	$	4,571.6