v3.26.1
Income Taxes
 12 Months Ended
Jul. 03, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes consisted of the following:
Fiscal Years Ended
(Dollars in millions)July 3,
2026		June 27,
2025		June 28,
2024
U.S. $316 $233 $249 
Non-U.S.3,374 1,280 196 
$3,690 $1,513 $445 
The provision for income taxes consisted of the following:
Fiscal Years Ended
(Dollars in millions)July 3,
2026		June 27,
2025		June 28,
2024
Current income tax expense:
U.S.$23 $16 $2 
Non-U.S. 520 32 30 
Total Current543 48 32 
Deferred income tax expense:
U.S.(50)(5)71 
Non-U.S. 13 1 7 
Total Deferred(37)(4)78 
Provision for income taxes$506 $44 $110 
The significant components of the Company’s deferred tax assets and liabilities were as follows:
Fiscal Years Ended
(Dollars in millions)July 3,
2026		June 27,
2025
Deferred tax assets
Accrued warranty$44 $32 
Inventory carrying value adjustments30 37 
Receivable allowances6 15 
Accrued compensation and benefits72 66 
Capitalized research expenses230 110 
Depreciation— 4 
Restructuring accruals2 — 
Lease liabilities62 64 
Other accruals and deferred items32 10 
Net operating losses297 477 
Tax credit carryforwards609 598 
Capital loss carryforwards68 72 
Other assets53 55 
Gross: Deferred tax assets1,505 1,540 
Less: Valuation allowance(337)(423)
Net: Deferred tax assets1,168 1,117 
Deferred tax liabilities
Unremitted earnings of certain non-U.S. entities(7)(5)
Depreciation(18)— 
Right-of-use assets(55)(59)
Net: Deferred tax liabilities(80)(64)
Total net deferred tax assets$1,088 $1,053 
At July 3, 2026, the Company recorded $1.1 billion of net deferred tax assets. The realization of most of these deferred tax assets is primarily dependent on the Company’s ability to generate sufficient U.S. and certain non-U.S. taxable income in future periods. Although realization is not assured, the Company’s management believes it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax assets considered realizable, however, may increase or decrease in subsequent periods when the Company re-evaluates the underlying basis for its estimates of future U.S. and certain non-U.S. taxable income.
The deferred tax asset valuation allowance decreased by $86 million in fiscal year 2026, primarily due to releases in valuation allowance associated with the enactment of the One Big Beautiful Bill Act and changes in tax attributes associated with an internal reorganization that were fully offset by a valuation allowance.
At July 3, 2026, the Company had U.S. tax net operating losses of approximately $2.3 billion, expiring from fiscal year 2027 to fiscal year 2045, and credit carryforwards of approximately $735 million, of which $135 million have no expiration date and the rest expire from fiscal year 2027 through fiscal year 2046. At July 3, 2026, the Company had non-U.S. tax net operating loss carryforwards of approximately $117 million, all of which are indefinite lived. As of July 3, 2026, the Company had gross U.S. capital loss carryforwards of $288 million, which if not utilized, will expire as of fiscal year 2029.
As of July 3, 2026, approximately $98 million and $38 million of the Company’s total U.S. net operating loss and tax credit carryforwards, respectively, are subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code.
The Company established Singapore as its principal executive offices in fiscal year 2024. The Singaporean statutory tax rate of 17% is used for purposes of the reconciliation between the provision for income taxes at the statutory rate and the effective tax rate. The following table presents a reconciliation to our effective tax rate pursuant to the prospective adoption of ASU 2023-09 for the fiscal year ended July 3, 2026:
Fiscal Year Ended
(Dollars in millions)July 3, 2026
Provision (benefit) at Singapore federal statutory rate$627 17.00 %
Foreign Tax Effects:
United States
Changes in valuation allowances(42)(1.14)%
     Share-based Compensation(55)(1.49)%
     Other11 0.30 %
Other foreign jurisdictions21 0.57 %
Changes in Valuation Allowance(44)(1.19)%
Nontaxable or nondeductible items
     Interest Expense39 1.06 %
     Other19 0.52 %
Changes in unrecognized tax benefits47 1.27 %
Other adjustments
     Effect of Rates different than statutory (591)(16.02)%
     Internal Re-organization48 1.30 %
Other4 0.11 %
Qualified Domestic Minimum Top-up Tax422 11.44 %
Effective Tax Rate$506 13.73 %
The following table presents a reconciliation between the provision for income taxes at the statutory rate and the effective tax rate for the fiscal years ended June 27, 2025 and June 28, 2024:
Fiscal Years Ended
(Dollars in millions)June 27,
2025		June 28,
2024
Provision at statutory rate$257 $76 
Permanent differences4 5 
Valuation allowance(18)47 
Effect of rates different than statutory(190)(2)
Research credit(6)(9)
Capital loss carryforward(2)(11)
Other individually immaterial items(1)4 
Provision for income taxes$44 $110 
The following table summarizes the cash paid for income taxes for the period indicated:
Fiscal Year Ended
(Dollars in millions)July 3, 2026
U.S.$19 
Non-U.S.21 
Total Cash Paid for Income Taxes (Net of Refunds)$40 
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others implemented through fiscal year 2028.
A substantial portion of the Company's operations in Singapore and Thailand operate under various tax incentive programs, which expire in whole or in part at various dates into fiscal year 2034. Certain tax incentives may be extended if specific conditions are met. The net impact of these tax incentive programs, after factoring in offsetting qualified domestic minimum top-up tax, resulted in an increase to the Company’s net income by approximately $197 million in fiscal year 2026 ($0.86 per share, diluted), an increase to the Company's net income by approximately $285 million in fiscal year 2025 ($1.32 per share, diluted) and an increase to the Company’s net income by approximately $40 million in fiscal year 2024 ($0.19 per share, diluted).
The Company analyzes the potential needs for deferred tax liabilities with respect to the accumulated earnings of foreign subsidiaries annually. The analysis focuses on the outside basis differences in the stock of the foreign subsidiaries as well as the withholding tax obligations those subsidiaries may have with respect to any distribution. The undistributed earnings for which taxes are not provided are permanently reinvested or can be repatriated without incremental tax liability.
As of July 3, 2026 and June 27, 2025, the Company had approximately $155 million and $107 million, respectively, of unrecognized tax benefits excluding interest and penalties. These amounts, if recognized, would impact the effective tax rate subject to certain future valuation allowance offsets.
The following table summarizes the activities related to the Company’s gross unrecognized tax benefits:
Fiscal Years Ended
(Dollars in millions)July 3,
2026		June 27,
2025		June 28,
2024
Balance of unrecognized tax benefits at the beginning of the year$107 $112 $116 
Gross increase for tax positions of prior years— 2 3 
Gross decrease for tax positions of prior years— (17)(12)
Gross increase for tax positions of current year48 11 5 
Lapse of statutes of limitation— (1)— 
Balance of unrecognized tax benefits at the end of the year$155 $107 $112 
It is the Company’s policy to include interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Operations and Comprehensive Income. Interest and penalties recorded on these tax positions were not material to any periods presented in the Consolidated Statements of Operations and Comprehensive Income. As of July 3, 2026, accrued interest and penalties related to unrecognized tax benefits did not materially change compared to fiscal year 2025.
The Company is required to file U.S. and non-U.S. income tax returns. The Company is no longer subject to examination of its U.S. income tax returns for years prior to fiscal year 2022 and prior to fiscal year 2016 for non-U.S. income tax returns.