Income Tax Expense (Tables)

12 Months Ended

Jul. 03, 2026

Schedule of Income before Income Tax, Domestic and Foreign

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


	2026		2025		2024
	(in millions)
Foreign	$	2,143	$	(1,348)	$	(543)
Domestic	10,874		(131)		40
Income (loss) before taxes	$	13,017	$	(1,479)	$	(503)

Schedule of Components of Income Tax Expense

The components of income tax expense were as follows:


	2026		2025		2024
	(in millions)
Current:
Foreign	$	249	$	165	$	158
U.S. - Federal	1,197		7		20
U.S. - State	18		2		7
	1,464		174		185
Deferred:
Foreign	(29)		(13)		7
U.S. - Federal	147		1		(19)
U.S. - State	2		—		(4)
	120		(12)		(16)
Income tax expense	$	1,584	$	162	$	169

The following table presents the Company’s Income tax expense and the effective tax rate:


	2026			2025			2024
	(in millions)
Income (loss) before taxes	$	13,017		$	(1,479)		$	(503)
Income tax expense	1,584			162			169
Effective tax rate	12		%	(11)		%	(34)		%

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, 2026		June 27, 2025
	(in millions)
Deferred tax assets:
Sales related reserves and accrued expenses not currently deductible	$	63	$	38
Accrued compensation and benefits not currently deductible	26		29
Net operating loss carryforward	43		41
Business credit carryforward	76		44
Long-lived assets	35		22
Interest and hedging costs not currently deductible	—		15
Other	23		15
Total deferred tax assets	266		204
Deferred tax liabilities:
Long-lived assets	(10)		(7)
Unremitted earnings of certain non-U.S. entities	(46)		(77)
Unrealized gain on Marketable equity securities	(172)		—
Other	(15)		(18)
Total deferred tax liabilities	(243)		(102)
Valuation allowances	(118)		(61)
Deferred tax assets, net	$	(95)	$	41

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for fiscal year 2026 is as follows:


	2026
	in USD (millions)		In percent
U.S. federal statutory income tax rate	$	2,733	21	%
State and local income taxes, net of federal income tax effect(1)	19		—
Foreign tax effects
Malaysia
Tax holiday exempt	(492)		(4)
Other	32		—
Other Foreign Jurisdictions	103		1
Tax rate and law change	(7)		—
Effect of cross-border tax law
Foreign-Derived Deduction-Eligible Income	(725)		(5)
Net Foreign Tested Income(2)	147		1
Other	8		—
Tax credits
Research and development tax credits	(60)		(1)
Change in valuation allowance	(2)		—
Non-taxable or non-deductible items
Stock-based compensation	(227)		(2)
Other permanent differences	(1)		—
Change in unrecognized tax benefits	70		1
Other adjustments	(14)		—
Income tax expense	$	1,584	12	%

(1) State taxes in Arizona, Florida, Illinois and Pennsylvania make up the majority of the tax effect in fiscal year 2026.

(2) U.S. companies are subject to a lower tax rate on certain income earned by its foreign subsidiaries. This regime is referred to as the Net Controlled Foreign Corporation Tested Income.

Reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate in 2025 and 2024 is as follows:


	2025		2024
	In percent
U.S. federal statutory rate	21	%	21	%
Tax rate differential on international incomes	(1)		(42)
Foreign withholding tax	(1)		(11)
Change in valuation allowance	—		(2)
Tax effect of U.S. foreign income inclusion	(7)		(1)
Tax effect of U.S. foreign derived intangible income	1		2
Tax effect of permanent differences	—		(2)
Tax effect of goodwill impairment	(26)		—
Tax effect of intangible assets	—		1
Tax rate change	—		1
Unremitted earnings of certain non-U.S. entities	(2)		2
Change in uncertain tax positions	(1)		(12)
Return to provision adjustment	1		(1)
Foreign income tax credits	4		5
R&D tax credits	1		3
Federal audit settlements	—		3
Other	(1)		(1)
Effective income tax rate	(11)	%	(34)	%

Schedule of Cash Flow, Supplemental Disclosures

Cash paid for income taxes, net of refunds received, by jurisdiction for the year ended July 3, 2026 is as follows:


	2026
	in millions
Federal	$	36
State	4
Foreign
India	18
Singapore	20
Japan	19
Korea	16
China	11
UK	11
Other	11
Total	146

Schedule of Unrecognized Tax Benefits Roll Forward

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding accrued interest and penalties for the year ended July 3, 2026:


	2026		2025		2024
	(in millions)
Unrecognized tax benefit, beginning	$	140	$	47	$	25
Gross increases related to prior year tax positions	31		6		10
Gross increases related to current year tax positions	168		17		15
Gross decrease related to prior year tax positions	(12)		(1)		(3)
Gross decrease related to lapse of statute of limitations	(4)		—		—
Gross increase related to transfer from Western Digital Corporation	—		78		—
Gross decrease related to settlement	—		(7)		—
Unrecognized tax benefit, ending	$	323	$	140	$	47