Table of Contents We identified the evaluation of net realizable value adjustments to inventories for excess or obsolescence as a critical audit matter. Evaluation of the Company’s estimates regarding forecasted sales and inventory consumption involved a high degree of auditor judgment. The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s process for determining net realizable value adjustments for inventory excess or obsolescence, including estimating forecasted sales and inventory consumption. We evaluated certain inventories for excess or obsolescence by comparing the Company’s sales and inventory consumption forecast to historical sales, historical inventory usage, known customer orders, and industry outlook reports. In addition, for certain inventories, we compared the Company’s historical estimates of net realizable value adjustments for excess and obsolescence to the actual physical inventory disposals to evaluate the Company’s ability to accurately estimate the net realizable value adjustments. Evaluation of the fair value of the underlying intangible assets utilized to record the deferred tax asset As discussed in note 1 to the consolidated financial statements, the Company adopted ASU No. 2016-16 in the current year and upon adoption recorded a deferred tax asset of $1.6 billion related to the estimated income tax effects of an intra-entity transfer of intangible assets. The recorded deferred tax asset involves significant judgment in estimating the fair value of the underlying intangible assets that are subject to amortization for tax purposes. We identified the evaluation of the fair value of the underlying intangible assets utilized to record the deferred tax asset as a critical audit matter. There was a high degree of subjectivity in evaluating the valuation methodology and assumptions utilized by the Company in estimating the fair value of the underlying intangible assets utilized to record the deferred tax asset. These assumptions included the fair value of the Company’s operating assets, discount rate and comparable company benchmark ratios utilized to calculate the portion of market value attributable to the intangible assets. The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s process to develop the assumptions used in the valuation, including the fair value of the Company’s operating assets, the discount rate, and comparable company benchmark ratios. We evaluated the fair value of the Company’s operating assets by comparing it to the Company’s market capitalization, adjusted for the fair value of the Company’s nonoperating assets and debt. We evaluated the comparable company benchmark rate by assessing comparable companies used by the Company in developing the assumption and testing the benchmark rate based on observable market information. We involved valuation professionals with specialized skills and knowledge, who assisted in: We have served as the Company’s auditor since 2004. Santa Clara, California December 13, 2019 /S/ KPMG LLP KPMG LLP 59 • Evaluating the valuation methodology utilized by the Company • Evaluating the discount rate by comparing it to a discount rate that was independently developed using observable market information.