Government Incentives

6 Months Ended

Feb. 24, 2023

Receivables [Abstract]

Government Incentives

Government Incentives

Brazil Financial Credits

Through one of our Brazilian subsidiaries, we participate in an incentive program, known as Programa de Apoio ao Desenvolvimento Tecnológico da Indústria de Semicondutores (also known as Technology Development Support of the Semiconductor Industry Program) (“PADIS”), pursuant to which the Brazilian government incentivizes the manufacture and sale of semiconductor components within Brazil.

In January 2022, the Brazilian government approved an extension to PADIS. The financial credits available through the program are set to expire in December 2026. PADIS provides for reduced import and other transaction-related taxes for certain procurement, manufacturing and sales activities. In exchange, we must invest in certain research and development activities related to semiconductor-based solutions in an amount equivalent to 5% of the gross revenues of such Brazilian subsidiary recognized in connection with incentivized sales of semiconductor components in Brazil, excluding exports and sales to customers located at the Manaus Free Trade Zone, subject to the limitations of 13.1% (through December 31, 2024) and 12.3% (from January 1, 2025 through December 31, 2026) of the subsidiary’s gross revenues.

Pursuant to PADIS, we recognized aggregate financial credits, reflected as a reduction of research and development expense, of $1.4 million and $4.0 million in the second quarter and first six months of 2023, respectively, and $6.0 million and $11.9 million in the second quarter and first six months of 2022, respectively. Financial credits earned under PADIS may be refunded in cash or used to offset liabilities for Brazil federal taxes. As of February 24, 2023 and August 26, 2022, receivables for earned but unused financial credits were $19.6 million and $18.7 million, respectively. Financial credits earned but unused as of February 24, 2023 can be utilized through December 2027.