NVIDIA CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with "Item 1A. Risk Factors", our
Consolidated Financial Statements and related Notes thereto, as well as other
cautionary statements and risks described elsewhere in this Annual Report on
Form 10-K, before deciding to purchase, hold or sell shares of our common
stock.

Overview

Our company and our activities

NVIDIA pioneered accelerated computing to help solve the most challenging
computational problems. Since our original focus on PC graphics, we have
expanded to several other large and important computationally intensive fields.
Fueled by the sustained demand for exceptional 3D graphics and the scale of the
gaming market, NVIDIA has leveraged its GPU architecture to create platforms for
scientific computing, AI, data science, AV, robotics, AR and VR.

Our two operating segments are "Graphics" and "Compute & Networking." Refer to
Note 17 of the Notes to the Consolidated Financial Statements in Part IV, Item
15 of this Annual Report on Form 10-K for additional information.

Based at Santa Clara, CaliforniaNVIDIA was incorporated in California
in April 1993 and reinstated in Delaware in April 1998.

Recent developments, future goals and challenges

Termination of Arm stock purchase agreement

On February 8, 2022, NVIDIA and SoftBank announced the termination of the Share
Purchase Agreement whereby NVIDIA would have acquired Arm from SoftBank. The
parties agreed to terminate because of significant regulatory challenges
preventing the completion of the transaction. We intend to record in operating
expenses a $1.36 billion charge in the first quarter of fiscal year 2023
reflecting the write-off of the prepayment provided at signing in September
2020.

Demand

Demand for our products is based on many factors, including our product
introductions, time to market, transitions, competitor product releases and
announcements, and competing technologies, all of which can impact the timing
and volume of our revenue. GPUs have use cases in addition to their designed and
marketed use case, such as for digital currency mining, including
blockchain-based platforms such as Ethereum. It is difficult for us to estimate
with any reasonable degree of precision the past or current impact of
cryptocurrency mining, or forecast the future impact of cryptocurrency mining,
on demand for our products. Volatility in the cryptocurrency market, including
new compute technologies, price changes in cryptocurrencies, government
cryptocurrency policies and regulations, and new cryptocurrency standards can
impact and have impacted in the past cryptocurrency demand, and further impact
demand for our products and our ability to estimate demand for our products.
Changes to cryptocurrency standards and processes including, but not limited to,
the pending Ethereum 2.0 standard may decrease the usage of GPUs for Ethereum
mining and may also create increased aftermarket resale of our GPUs, impact
retail prices for our GPUs, increase returns of our products in the distribution
channel, and may reduce demand for our new GPUs. We have introduced LHR GeForce
GPUs with limited Ethereum mining capability and increased the supply of CMP in
an effort to address demand from gamers and direct miners to CMP. Beginning in
the second quarter of fiscal year 2022, nearly all our desktop NVIDIA Ampere
architecture GeForce GPU shipments were LHR in our effort to direct GeForce to
gamers. If attempts in the aftermarket to improve the hash rate capabilities of
our LHR cards are successful, our gaming cards may become more attractive to
miners, and therefore limit our ability to supply our cards to non-mining
customers. We cannot predict whether our strategy of using LHR cards and CMP
will achieve our desired outcome. Additionally, consumer and enterprise behavior
during the COVID-19 pandemic has made it more difficult for us to estimate
future demand and may have changed pre-pandemic behaviors, and these challenges
may be more pronounced or volatile in the future on both a global and regional
basis. In estimating demand and evaluating trends, we make multiple assumptions,
any of which may prove to be incorrect.

Supply

Our manufacturing lead times are very long and in some cases, extend to be
twelve months or longer, which requires us to make estimates of customers'
future demand. These conditions could lead to a significant mismatch between
supply and demand, giving rise to product shortages or excess inventory, and
make our demand forecast more uncertain. To

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have shorter shipment lead times and quicker delivery schedules for our
customers, we may build finished products and maintain inventory for anticipated
periods of growth which do not occur, anticipating demand that does not
materialize, or for what we believe is pent-up demand. During fiscal year 2022,
we made substantial strides in broadening our supply base to scale our company
and better serve customer demand. We expect to remain supply-constrained into
the first half of fiscal year 2023, primarily in Gaming and Networking. We have
placed non-cancellable inventory orders for certain supply in advance of our
historical lead times, paid premiums and provided deposits to secure future
supply and capacity and may need to continue to do so in the future. Ordering
product in advance of our historical lead times to secure supply in a
constrained environment may trigger excess inventory or other charges if there
is a partial or complete reduction in long-term demand for our products or if
such demand is served by our competitors. Given our long lead times on inventory
purchasing, demand may be perishable or may disappear. Given our current long
lead times, we may order components before our product design is finalized and
changes to the product design or end demand could trigger excess inventory. Our
supply deliveries and production may be non-linear within a quarter or year
which could cause changes to expected revenue or cash flows.

COVID-19[female[feminine

The COVID-19 pandemic continued during fiscal year 2022. Most of our employees
continue to work remotely and we have paused most business travel. During fiscal
year 2022, our Gaming, Data Center and Professional Visualization market
platforms have benefited from stronger demand as people continue to work, learn,
and play from home. Our Professional Visualization market platform also
benefited from demand for workstations as enterprises support hybrid work
environments. As our offices begin to reopen, we expect to incur incremental
expenses as we resume onsite services and related in-office costs.

As the COVID-19 pandemic continues, timing and overall customer demand, availability of supply chain, logistics services and component sourcing, as well as the impact of increased inflation can have a material net negative impact on our business and financial results.

We believe our existing balances of cash, cash equivalents and marketable
securities, along with commercial paper arrangements, will be sufficient to
satisfy our working capital needs, capital asset purchases, dividends, debt
repayments and other liquidity requirements associated with our existing
operations.

Fiscal Year 2022 Summary

                                                        Year Ended
                                   January 30,                 January 31,
                                      2022                         2021            Change

                                          ($ in millions, except per share data)
Revenue                        $        26,914                $    16,675             Up 61%
Gross margin                              64.9   %                   62.3  %      Up 260 bps
Operating expenses             $         7,434                $     5,864             Up 27%
Income from operations         $        10,041                $     4,532            Up 122%
Net income                     $         9,752                $     4,332            Up 125%
Net income per diluted share   $          3.85                $      1.73            Up 123%


We specialize in markets where our computing platforms can provide tremendous
acceleration for applications. These platforms incorporate processors,
interconnects, software, algorithms, systems, and services to deliver unique
value. Our platforms address four large markets where our expertise is critical:
Gaming, Data Center, Professional Visualization, and Automotive.

The turnover for the 2022 financial year is $26.91 billionup 61% from a year ago.

Gaming revenue was up 61% from a year ago reflecting higher sales of GeForce
GPUs. We continue to benefit from strong demand for NVIDIA Ampere architecture
products, and believe the increase in Gaming revenue during fiscal year 2022
resulted from a combination of factors, including: the ramp of new RTX 30 Series
GPUs; the release of new games supporting ray tracing; the rising popularity of
gaming, esports, content creation and streaming; the demand for new and upgraded
systems to support the increase in remote work; and the ability of end users to
engage in cryptocurrency mining.

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Although nearly all desktop NVIDIA Ampere architecture GeForce GPU shipments are
LHR to help direct GeForce GPUs to gamers, our GPUs are capable of
cryptocurrency mining. Gamers and others are therefore able to mine
cryptocurrency using our GPUs, although we have limited visibility into how much
this impacts our overall GPU demand. Volatility in the cryptocurrency market,
including changes in the prices of cryptocurrencies or method of verifying
transactions, such as proof of work or proof of stake, can impact demand for our
products and degrade our ability to accurately estimate it. We are unable to
estimate with any degree of precision the impact this volatility is likely to
have in the future.

Data center revenue increased 58% year-over-year, driven primarily by sales of NVIDIA Ampere architecture GPUs for both training and inference for cloud computing and AI workloads such as natural language processing and deep recommendation models.

Professional Visualization revenue was up 100% from a year ago driven by the
ramp of NVIDIA Ampere architecture products and strong demand for workstations
as enterprises support hybrid work environments, as well as growth in workloads
such as 3D design, AI and rendering.

Automotive revenue was up 6% from a year ago due to autonomous driving and AI cockpit solutions offset by lower revenue from legacy cockpits.

OEM and Other revenue was up 84% from a year ago primarily driven by CMP sales.
CMP revenue was $550 million for the fiscal year and was nominal in the prior
year.

Revenue for our CMP products declined significantly in the fourth quarter of
fiscal year 2022. We are unable to estimate with any degree of precision the
impact that volatility in the cryptocurrency market, as discussed above, is
likely to have on future CMP sales.

Gross margin for fiscal year 2022 was up 260 basis points from a year ago driven
by lower Mellanox acquisition-related charges, including a non-recurring
inventory step-up charge of $161 million in fiscal year 2021. Margins also
benefited from a higher-end mix within Gaming, partially offset by a mix shift
within Data Center.

Operating expenses for fiscal year 2022 were up 27% from a year ago primarily
driven by stock-based compensation, compensation-related costs associated with
employee growth and higher infrastructure costs.

Income from operations was $10.04 billion, up 122% from a year ago. Net income
and net income per diluted share were $9.75 billion and $3.85, up 125% and 123%,
respectively, from a year ago.

Cash, cash equivalents and marketable securities were $21.21 billionfrom
$11.56 billion one year earlier. The increase reflects the generation of cash flow from operations and $5.00 billion proceeds from the debt issue.

We payed $399 million quarterly cash dividends in fiscal 2022.

Marketplace Platform Highlights

At our November 2021 GPU Technology Conference, we announced general
availability of NVIDIA Omniverse Enterprise; 65 new and updated software
development kits, including NVIDIA Riva, Modulus, ReOpt, Morpheus, cuNumeric,
and Clara Holoscan; NVIDIA Quantum-2 400Gbps switch and end-to-end networking
platform; and NVIDIA Jetson AGX Orin for edge AI and autonomous machines.

In our Gaming platform during fiscal year 2022, we further expanded our desktop
and laptop GeForce RTX 30 Series GPU line-ups; expanded the RTX ecosystem of
games and applications to over 240; announced plans to integrate NVIDIA DLSS
into the Unity game engine; and introduced a new high-performance membership
tier to GeForce NOW.

In our Data Center platform, we launched new NVIDIA A30 and A10 GPUs for
mainstream AI, data analytics and graphics; debuted a new class of
NVIDIA-Certified Systems with leading server OEMs; unveiled NVIDIA Grace, our
first Arm-based data center CPU; launched the NVIDIA AI Enterprise software
suite; unveiled the NVIDIA Base Command and Fleet Command AI software offerings;
and announced plans to build Earth-2, an AI supercomputer dedicated to
addressing the global climate change crisis.

In our Professional Visualization platform, we unveiled NVIDIA RTX GPUs for
next-generation notebook and desktop workstations; and launched NVIDIA Omniverse
Enterprise for collaborative 3D design, digital twins and virtual worlds and
NVIDIA Omniverse for Creators.

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In our Automotive platform, we unveiled the NVIDIA DRIVE Atlan next-generation
SOC; announced design wins with Mercedes-Benz for the AI cockpit in its new EQS
sedan; with Volvo Cars for the autonomous driving computer in its
next-generation cars, beginning with the XC90 in 2022; with energy vehicles from
R-Auto, IM Motors, NIO, Faraday Future, VinFast and Xpeng; with robotaxis
including Cruise, Amazon Zoox, Pony.ai and AutoX; with autonomous trucking
companies Embark, Kodiak Robotics and Plus; formed a multi-year partnership with
Jaguar Land Rover to jointly develop and deliver next-generation automated
driving systems, plus AI-enabled services and experiences; and announced that
Desay, Flex, Quanta, Valeo and ZF are using the NVIDIA DRIVE Hyperion platform
to manufacture safe and secure AV systems for vehicle makers.

Significant Accounting Policies and Estimates

Management's discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States, or U.S. GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue, cost of revenue, expenses and related disclosure
of contingencies. On an on-going basis, we evaluate our estimates, including
those related to inventories, revenue recognition, income taxes, and goodwill.
We base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities.

We believe the following critical accounting policies affect our significant
judgments and estimates used in the preparation of our consolidated financial
statements. Our management has discussed the development and selection of these
critical accounting policies and estimates with the Audit Committee of our Board
of Directors. The Audit Committee has reviewed our disclosures relating to our
critical accounting policies and estimates in this Annual Report on Form 10-K.

Inventories

Inventory cost is computed on an adjusted standard basis, which approximates
actual cost on an average or first-in, first-out basis. We charge cost of sales
for inventory provisions to write-down our inventory to the lower of cost or net
realizable value or for obsolete or excess inventory. Most of our inventory
provisions relate to excess quantities of products or components, based on our
inventory levels and future product purchase commitments compared to assumptions
about future demand and market conditions.

Situations that may result in excess or obsolete inventory include changes in
business and economic conditions, changes in market conditions, sudden and
significant decreases in demand for our products, inventory obsolescence because
of changing technology and customer requirements, new product introductions
resulting in less demand for existing products or inconsistent spikes in demand
due to unexpected end use cases, failure to estimate customer demand properly,
ordering in advance of historical lead-times and the impact of changes in future
demand, or increase in demand for competitive products, including competitive
actions. Cancellation or deferral of customer purchase orders could result in
our holding excess inventory.

The overall net effect on our gross margin from inventory provisions and sales
of items previously written down was an unfavorable impact of 0.9% in fiscal
year 2022 and insignificant in fiscal year 2021. As a fabless semiconductor
company, we must make commitments to purchase inventory based on forecasts of
future customer demand. In doing so, we must account for our third-party
manufacturers' lead times and constraints. Our manufacturing lead times are very
long and in some cases, extend on to be twelve months or longer, which requires
us to make estimates of customers' future demand. We place non-cancellable
inventory orders for certain products in advance of our historical lead times,
pay premiums and provide deposits to secure future supply and capacity. We also
adjust to other market factors, such as product offerings and pricing actions by
our competitors, new product transitions, and macroeconomic conditions - all of
which may impact demand for our products.

Refer to the discussion of gross profit and gross margin below in this MD&A for further details.

Revenue recognition

We derive our revenue from product sales, including hardware and systems,
license and development arrangements, software licensing, and cloud services. We
determine revenue recognition through the following steps: (1) identification of
the contract with a customer; (2) identification of the performance obligations
in the contract; (3) determination of the transaction price; (4) allocation of
the transaction price to the performance obligations in the contract (where
revenue is

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allocated on a relative standalone selling price basis by maximizing the use of
observable inputs to determine the standalone selling price for each performance
obligation); and (5) recognition of revenue when, or as, we satisfy a
performance obligation.

Product sales revenue

Revenue from product sales is recognized upon transfer of control of products to
customers in an amount that reflects the consideration we expect to receive in
exchange for those products. Certain products are sold with support or an
extended warranty for the incorporated system, hardware, and/or software.
Support and extended warranty revenue are recognized ratably over the service
period, or as services are performed. Revenue is recognized net of allowances
for returns, customer programs and any taxes collected from customers.

For products sold with a right of return, we record a reduction to revenue by
establishing a sales return allowance for estimated product returns at the time
revenue is recognized, based primarily on historical return rates. However, if
product returns for a fiscal period are anticipated to exceed historical return
rates, we may determine that additional sales return allowances are required to
properly reflect our estimated exposure for product returns.

Our customer programs involve rebates, which are designed to serve as sales
incentives to resellers of our products in various target markets, and marketing
development funds, or MDFs, which represent monies paid to our partners that are
earmarked for market segment development and are designed to support our
partners' activities while also promoting NVIDIA products. We account for
customer programs as a reduction to revenue and accrue for potential rebates and
MDFs based on the amount we expect to be claimed by customers.

License and development agreements

Our license and development arrangements with customers typically require
significant customization of our IP components. As a result, we recognize the
revenue from the license and the revenue from the development services as a
single performance obligation over the period in which the development services
are performed. We measure progress to completion based on actual cost incurred
to date as a percentage of the estimated total cost required to complete each
project. If a loss on an arrangement becomes probable during a period, we record
a provision for such loss in that period.

Refer to Note 1 of the Notes to the Consolidated Financial Statements in Part IV, Section 15 of this Annual Report on Form 10-K for more information.

Income taxes

We recognize federal, state and foreign current tax liabilities or assets based
on our estimate of taxes payable or refundable in the current fiscal year by tax
jurisdiction. We recognize federal, state and foreign deferred tax assets or
liabilities, as appropriate, for our estimate of future tax effects attributable
to temporary differences and carryforwards; and we record a valuation allowance
to reduce any deferred tax assets by the amount of any tax benefits that, based
on available evidence and judgment, are not expected to be realized.

Our calculation of deferred tax assets and liabilities is based on certain
estimates and judgments and involves dealing with uncertainties in the
application of complex tax laws. Our estimates of deferred tax assets and
liabilities may change based, in part, on added certainty or finality to an
anticipated outcome, changes in accounting standards or tax laws in the United
States, or foreign jurisdictions where we operate, or changes in other facts or
circumstances. In addition, we recognize liabilities for potential United States
and foreign income tax contingencies based on our estimate of whether, and the
extent to which, additional taxes may be due. If we determine that payment of
these amounts is unnecessary or if the recorded tax liability is less than our
current assessment, we may be required to recognize an income tax benefit or
additional income tax expense in our financial statements accordingly.

As of January 30, 2022, we had a valuation allowance of $907 million related to
state and certain other deferred tax assets that management determined are not
likely to be realized due to jurisdictional projections of future taxable
income, tax attributes usage limitation by certain jurisdictions, and potential
utilization limitations of tax attributes acquired as a result of stock
ownership changes. To the extent realization of the deferred tax assets becomes
more-likely-than-not, we would recognize such deferred tax assets as an income
tax benefit during the period.

We recognize the benefit from a tax position only if it is more-likely-than-not
that the position would be sustained upon audit based solely on the technical
merits of the tax position. Our policy is to include interest and penalties
related to unrecognized tax benefits as a component of income tax expense.

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Refer to Note 14 of the Notes to the Consolidated Financial Statements in Part IV, Section 15 of this Annual Report on Form 10-K for more information.

Good will

Goodwill is subject to our annual impairment test during the fourth quarter of
our fiscal year, or earlier, if indicators of potential impairment exist, using
either a qualitative or a quantitative assessment. Our impairment review process
compares the fair value of the reporting unit in which the goodwill resides to
its carrying value. As of January 30, 2022, the total carrying amount of
goodwill was $4.35 billion and the amount of goodwill allocated to our Graphics
and Compute & Networking reporting units was $361 million and $3.99 billion,
respectively. Determining the fair value of a reporting unit requires us to make
judgments and involves the use of significant estimates and assumptions. We also
make judgments and assumptions in allocating assets and liabilities to each of
our reporting units. We base our fair value estimates on assumptions we believe
to be reasonable but that are unpredictable and inherently uncertain.

We performed our annual goodwill assessment during the fourth quarter of fiscal
year 2022 using a qualitative assessment and concluded there was no goodwill
impairment.

Refer to Note 6 of the Notes to the Consolidated Financial Statements in Part IV, Section 15 of this Annual Report on Form 10-K for more information.

Operating results

A discussion regarding our financial condition and results of operations for
fiscal year 2022 compared to fiscal year 2021 is presented below. A discussion
regarding our financial condition and results of operations for fiscal year 2021
compared to fiscal year 2020 can be found under Item 7 in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on
February 26, 2021, which is available free of charge on the SEC's website at
http://www.sec.gov and at our investor relations website,
http://investor.nvidia.com.

The following table sets forth, for the periods indicated, certain items of our Consolidated Statements of Income expressed as a percentage of revenue.

                                              Year Ended
                                     January 30,      January 31,
                                        2022             2021
Revenue                                  100.0  %         100.0  %
Cost of revenue                           35.1             37.7
Gross profit                              64.9             62.3
Operating expenses:
Research and development                  19.6             23.5
Sales, general and administrative          8.0             11.6

Total operating expenses                  27.6             35.1
Income from operations                    37.3             27.2
Interest income                            0.1              0.3
Interest expense                          (0.9)            (1.1)
Other, net                                 0.4              0.1
Other income (expense), net               (0.4)            (0.7)
Income before income tax expense          36.9             26.5
Income tax expense                         0.7              0.5
Net income                                36.2  %          26.0  %


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Income

Revenue by segments to be reported

                                                Year Ended
                         January 30,       January 31,          $            %
                             2022              2021           Change       Change

                                             ($ in millions)
Graphics                $     15,868      $      9,834      $  6,034         61  %
Compute & Networking          11,046             6,841         4,205         61  %
Total                   $     26,914      $     16,675      $ 10,239         61  %


Graphics - Graphics segment revenue increased by 61% in fiscal year 2022
compared to fiscal year 2021. We continue to benefit from strong demand for
NVIDIA Ampere architecture products, and believe the increase in Gaming revenue
during fiscal year 2022 resulted from a combination of factors, including: the
ramp of new RTX 30 Series GPUs; the release of new games supporting ray tracing;
the rising popularity of gaming, esports, content creation and streaming; the
demand for new and upgraded systems to support the increase in remote work; and
the ability of end users to engage in cryptocurrency mining.

Compute & Networking - Compute & Networking segment revenue increased by 61% in
fiscal year 2022 compared to fiscal year 2021, driven primarily by sales of
NVIDIA Ampere architecture products to hyperscale customers for cloud computing
and workloads such as natural language processing and deep recommender models,
as well as to vertical industries. The increase compared to fiscal year 2021
also reflects the strong sales of networking products and that fiscal year 2022
includes a full year of networking revenue as Mellanox was acquired in April
2020. CMP contributed $550 million in fiscal year 2022 compared to an
insignificant amount in the prior year.

Revenue concentration

Revenue from sales to customers outside of the United States accounted for 84%
and 81% of total revenue for fiscal years 2022 and 2021, respectively. Revenue
by geographic region is allocated to individual countries based on the location
to which the products are initially billed even if the revenue is attributable
to end customers in a different location.

No customer represented 10% or more of total revenue for fiscal years 2022 and 2021.

Gross profit and gross margin

Gross profit consists of total revenue, net of allowances, less cost of revenue.
Cost of revenue consists primarily of the cost of semiconductors, including
wafer fabrication, assembly, testing and packaging, board and device costs,
manufacturing support costs, including labor and overhead associated with such
purchases, final test yield fallout, inventory and warranty provisions, memory
and component costs, tariffs, and shipping costs. Cost of revenue also includes
acquisition-related costs, development costs for license and service
arrangements, IP-related costs, and stock-based compensation related to
personnel associated with manufacturing.

Our overall gross margin was 64.9% and 62.3% for fiscal years 2022 and 2021,
respectively. The increase in fiscal year 2022 was primarily due to lower
Mellanox acquisition-related charges, including a non-recurring inventory
step-up charge of $161 million in fiscal year 2021. The increase also benefited
from a higher-end mix within Graphics, partially offset by a mix shift within
Compute & Networking.

Inventory provisions totaled $354 million and $116 million for fiscal years 2022
and 2021, respectively. Sales of inventory that was previously written-off or
written-down totaled $111 million and $145 million for fiscal years 2022 and
2021, respectively. As a result, the overall net effect on our gross margin was
an unfavorable impact of 0.9% in fiscal year 2022 and insignificant in fiscal
year 2021.

The gross margin of our Graphics segment increased during fiscal year 2022 when
compared to fiscal year 2021, primarily due to higher-end mix within GeForce
GPUs.

The gross margin of our Compute & Networking segment decreased during fiscal
year 2022 when compared to fiscal year 2021, primarily due to a shift in product
mix and partially offset by a reduced contribution from Automotive solutions.

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Operating Expenses
                                                                    Year Ended
                                              January 30,       January 31,          $           %
                                                  2022              2021          Change       Change

                                                                  ($ in millions)
Research and development expenses            $     5,268       $     3,924       $ 1,344         34  %
% of net revenue                                    19.6  %           23.5  %
Sales, general and administrative expenses         2,166             1,940           226         12  %
% of net revenue                                     8.0  %           11.6  %
Total operating expenses                     $     7,434       $     5,864       $ 1,570         27  %


Research and Development

Research and development expenses increased 34% in fiscal 2022 compared to fiscal 2021, primarily due to stock-based compensation, compensation-related costs associated with headcount growth and rising infrastructure costs.

Sales, general and administrative

Sales, general and administrative expenses increased by 12% in fiscal year 2022
compared to fiscal year 2021, primarily driven by stock-based compensation,
compensation-related costs associated with employee growth, partially offset by
lower amortization of intangibles.

Other income (expenses), net

Interest income consists of interest earned on cash, cash equivalents and
marketable securities. Interest income was $29 million and $57 million in fiscal
years 2022 and 2021, respectively. The decrease in interest income was primarily
due to lower interest rates earned on our investments.

Interest expense is primarily comprised of coupon interest and debt discount
amortization related to our notes. Interest expense was $236 million and $184
million in fiscal years 2022 and 2021, respectively. The increase in expense
reflects interest on the $5.00 billion note issued in June 2021.

Other, net, consists primarily of realized or unrealized gains and losses from
investments in non-affiliated entities and the impact of changes in foreign
currency rates. Other, net, was an income of $107 million during fiscal year
2022 and not significant during fiscal year 2021. The increase was primarily due
to unrealized gains from our investments in non-affiliated entities. Refer to
Note 9 of the Notes to the Consolidated Financial Statements in Part IV, Item 15
of this Annual Report on Form 10-K for additional information regarding our
investments in non-affiliated entities.

Income taxes

We recorded an income tax expense of $189 million and $77 million for fiscal years 2022 and 2021, respectively. Our annual effective tax rate was 1.9% and 1.7% for fiscal years 2022 and 2021, respectively.

The increase in our effective tax rate in fiscal year 2022 as compared to fiscal
year 2021 was primarily due to an increase in the amount of earnings subject to
U.S. tax, and a decreased impact of tax benefits from the U.S. federal research
tax credit, partially offset by the benefit of the foreign-derived intangible
income deduction, and the discrete benefit of the domestication of a foreign
subsidiary, or the Domestication.

Our effective tax rate for fiscal year 2022 was lower than the U.S. federal
statutory rate of 21% due to tax benefits from the foreign-derived intangible
income deduction, income earned in jurisdictions, including the British Virgin
Islands and Israel, that are subject to taxes lower than the U.S. federal
statutory tax rate, excess tax benefits related to stock-based compensation,
recognition of U.S. federal research tax credit and the one-time benefits of the
Domestication.

Our effective tax rate for fiscal year 2021 was lower than the U.S. federal
statutory rate of 21% due primarily to income earned in jurisdictions, including
the British Virgin Islands, Israel, and Hong Kong, where the tax rate was lower
than the U.S. federal statutory tax rate, recognition of U.S. federal research
tax credits, and excess tax benefits related to stock-based compensation.

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Refer to Note 14 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for additional information, including domestication.

Cash and capital resources

                                                     January 30,       January 31,
                                                         2022              2021

                                                             (In millions)
Cash and cash equivalents                           $      1,990      $        847
Marketable securities                                     19,218            10,714
Cash, cash equivalents, and marketable securities   $     21,208      $     11,561


                                                                 Year Ended
                                                       January 30,       January 31,
                                                           2022              2021

                                                               (In millions)
Net cash provided by operating activities             $      9,108      $   

5,822

Net cash provided by (used in) investing activities ($9,830) $

(19,675)

Net cash provided by financing activities             $      1,865      $   

3,804


As of January 30, 2022, we had $21.21 billion in cash, cash equivalents and
marketable securities, an increase of $9.65 billion from the end of fiscal year
2021. Our investment policy requires the purchase of highly rated fixed income
securities, the diversification of investment types and credit exposures, and
certain maturity limits on our portfolio.

Cash provided by operating activities increased in fiscal year 2022 compared to
fiscal year 2021, due to higher net income, partially offset by changes in
working capital. Changes in working capital were primarily driven by prepayments
of $1.87 billion for long-term supply agreements and increases in trade
receivables due to higher revenue.

Cash used in investing activities decreased in fiscal year 2022 compared to cash
provided in fiscal year 2021, reflecting lower payments in acquiring businesses
as compared to the acquisition of Mellanox in fiscal year 2021, and higher
marketable securities sales and maturities, partially offset by higher purchases
of marketable securities.

Cash provided by financing activities decreased in fiscal year 2022 compared to
cash provided in fiscal year 2021, which primarily reflects a debt repayment in
the fiscal year 2022 and higher tax payments on restricted stock units.

Liquidity

Our primary sources of liquidity are our cash and cash equivalents, our
marketable securities, and the cash generated by our operations. As of
January 30, 2022, we had $21.21 billion in cash, cash equivalents and marketable
securities. We believe that we have sufficient liquidity to meet our operating
requirements for at least the next twelve months, and for the foreseeable
future, including our future supply obligations and additional supply. We
continuously evaluate our liquidity and capital resources, including our access
to external capital, to ensure we can finance our future capital requirements.

Our marketable securities consist of certificates of deposits and debt
securities issued by the U.S. government and its agencies, highly rated
corporations and financial institutions, and foreign government entities. These
marketable securities are primarily denominated in U.S. dollars. Refer to Note 8
of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of
this Annual Report on Form 10-K for additional information.

In fiscal 2023, we expect to use our existing cash and cash equivalents, marketable securities and cash generated from our operations to fund our capital investments of approximately $1.4 billion related to property, plant and equipment.

We have approximately $1.4 billion of cash, cash equivalents, and marketable
securities held outside the U.S. for which we have not accrued any related
foreign or state taxes if we repatriate these amounts to the U.S. Other than
that, substantially all of our cash, cash equivalents and marketable securities
held outside of the U.S. as of January 30, 2022 are available for use in the
U.S. without incurring additional U.S. federal income taxes. Following the
Domestication, we

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have utilized almost all of our accumulated U.S. federal research tax credits
during fiscal year 2022, resulting in higher cash tax payments starting in
fiscal year 2023. In addition, beginning in fiscal year 2023, the TCJA requires
taxpayers to capitalize research and development expenditures and to amortize
domestic expenditures over five years and foreign expenditures over fifteen
years. This will impact cash flows from operations and result in significantly
higher cash tax payments starting in fiscal year 2023. Refer to Note 14 of the
Notes to the Consolidated Financial Statements in Part IV, Item 15 of this
Annual Report on Form 10-K for additional information.

Return of capital to shareholders

In fiscal year 2022, we paid $399 million in quarterly cash dividends. Our cash
dividend program and the payment of future cash dividends under that program are
subject to our Board's continuing determination that the dividend program and
the declaration of dividends thereunder are in the best interests of our
shareholders.

As of January 30, 2022, we were authorized, subject to certain specifications,
to repurchase additional shares of our common stock up to $7.24 billion through
December 2022. We did not repurchase any shares during fiscal year 2022.

Outstanding Debt and Commercial Paper Program

From January 30, 2022we had pending:

• $1.25 billion in bonds maturing in 2023;

• $1.25 billion in bonds maturing in 2024;

• $1.00 billion of bonds maturing in 2026;

• $1.25 billion in bonds maturing in 2028;

•1.50 billion dollars of bonds maturing in 2030;

•1.25 billion dollars of bonds maturing in 2031;

• $1.00 billion in bonds due in 2040;

• $2.00 billion in bonds due in 2050; and

• $500 million in notes due in 2060.

We have an $575 million commercial paper program to support general business needs. From January 30, 2022we had not issued any commercial paper.

Refer to Note 12 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for further discussion.

Contractual obligations

We have unrecognized tax benefits of $729 million, which includes related
interest and penalties of $59 million recorded in non-current income tax payable
as of January 30, 2022. We are unable to reasonably estimate the timing of any
potential tax liability, interest payments, or penalties in individual years due
to uncertainties in the underlying income tax positions and the timing of the
effective settlement of such tax positions. We are currently under examination
by the Internal Revenue Service for our fiscal years 2018 and 2019. Refer to
Note 14 of the Notes to the Consolidated Financial Statements in Part IV, Item
15 of this Annual Report on Form 10-K for further information.

For a description of our long-term debt, purchase obligations, and operating
lease obligations, refer to Note 12, Note 13, and Note 3 of the Notes to the
Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on
Form 10-K, respectively.

Climate Change

Refer to Part I, Item 1 of this Annual Report on Form 10-K for a description of
Environmental, Social and Corporate Governance activities. To date, there has
been no material impact to our results of operations associated with global
sustainability regulations, compliance, costs from sourcing renewable energy or
climate-related business trends. There are no material current climate change
regulations impacting us, however, we are monitoring potential regulation
changes in California, the United States, the United Kingdom, the European Union
and other jurisdictions. We believe that climate change has not had a material
impact to our revenue to date. We have not experienced any significant physical
effects of climate change to date on our operations and results, nor any
significant impacts on the cost or availability of insurance. In fiscal year
2023, we plan to build Earth-2, an AI supercomputer dedicated to predicting the
impacts of climate change and increase our purchases of Renewable Energy
Credits.

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Adoption of new and recently issued accounting pronouncements

Refer to Note 1 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for a discussion of the adoption of new and recently issued accounting pronouncements.

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