Income Tax Expense (Tables)

12 Months Ended

Jul. 03, 2020

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The domestic and foreign components of Income (loss) before taxes were as follows:

	2020		2019		2018
	(in millions)
Foreign	$	(695)	$	(642)	$	2,398
Domestic	649		355		(313)
Income (loss) before taxes	$	(46)	$	(287)	$	2,085

Schedule of Components of Income Tax Expense (Benefit)

The components of the income tax expense (benefit) were as follows:

	2020		2019		2018
	(in millions)
Current:
Foreign	$	157	$	181	$	166
Domestic - Federal	124		(91)		1,597
Domestic - State	5		3		(5)
	286		93		1,758
Deferred:
Foreign	(29)		226		(39)
Domestic - Federal	(53)		141		(300)
Domestic - State	—		7		(9)
	(82)		374		(348)
Income tax expense	$	204	$	467	$	1,410

Schedule of Deferred Tax Assets and Liabilities

Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities were as follows:

	July 3, 2020		June 28, 2019
	(in millions)
Deferred tax assets:
Sales related reserves and accrued expenses not currently deductible	$	52	$	48
Accrued compensation and benefits not currently deductible	130		124
Net operating loss carryforward	251		285
Business credit carryforward	438		410
Long-lived assets	123		144
Other	133		135
Total deferred tax assets	1,127		1,146
Deferred tax liabilities:
Long-lived assets	(294)		(413)
Unremitted earnings of certain non-U.S. entities	(228)		(220)
Other	(26)		(32)
Total deferred tax liabilities	(548)		(665)
Valuation allowances	(624)		(619)
Deferred tax liabilities, net	$	(45)	$	(138)

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows:

	2020		2019		2018
U.S. Federal statutory rate	21	%	21	%	28	%
Tax rate differential on international income	(443)		(75)		(34)
Tax effect of U.S. foreign income inclusion	(38)		(7)		1
Tax effect of U.S. foreign minimum tax	(235)		(38)		—
Tax effect of U.S. foreign derived intangible income	109		11		—
Tax effect of U.S. non-deductible stock-based compensation	(21)		(1)		1
Tax effect of U.S. permanent differences	(26)		(3)		(1)
Impact of 2017 Act:
One-time mandatory deemed repatriation tax	—		(41)		75
Re-measurement of deferred taxes	—		2		(3)
Change in valuation allowance	(12)		(2)		5
Unremitted earnings of certain non-U.S. entities	(114)		(79)		—
Foreign income tax credits	191		23		—
Federal R&D credits	147		24		(4)
Other	(22)		2		—
Effective tax rate	(443)	%	(163)	%	68	%

Summary of Operating Loss Carryforwards

Following is a summary of the Company’s federal and state NOL/tax credit carryforwards and the related expiration dates of these NOL/tax credit carryforwards:

Jurisdiction	NOL/Tax Credit Carryforward Amount		Expiration
	(in millions)
Federal NOL (Pre 2017 Act Generation)	$	676	2021 to 2037
Federal NOL (Post 2017 Act Generation)	—		No expiration
State NOL	471		2021 to 2038
Federal tax credits	58		2021 to 2034
State tax credits	619		No expiration

The major jurisdictions that the Company receives foreign NOL carryforwards and the related amounts and expiration dates of these NOL carryforwards are as follows:

Jurisdiction	NOL Carryforward Amount		Expiration
	(in millions)
Malaysia	$	167	2025 to 2027
Japan	127		2023 to 2026
Belgium	121		No expiration
China	103		2022 to 2025
Spain	48		No expiration

Summary of Income Tax Contingencies

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits excluding accrued interest and penalties:

	2020		2019		2018
	(in millions)
Unrecognized tax benefit, beginning balance	$	695	$	551	$	522
Gross increases related to current year tax positions	11		172		38
Gross increases related to prior year tax positions	35		8		30
Gross decreases related to prior year tax positions	(4)		(24)		(9)
Settlements	(12)		(1)		(19)
Lapse of statute of limitations	(8)		(11)		(11)
Acquisitions	—		—		—
Unrecognized tax benefit, ending balance	$	717	$	695	$	551