MagnaChip Semiconductor Corp.

The stable outlook on MagnaChip Semiconductor Corp. reflects our expectation that despite challenging operational performance, the company will be able to meet its financial obligations over the next 12 months, given the lack of sizeable debt maturity until July 2021. We could lower the rating if MagnaChip's profitability deteriorates significantly, possibly due to a material weakening of its market position or key customer relationships, and we see heightening risk of the company sustaining its highly leveraged capital structure. Significantly increasing liquidity risk and a rapidly shrinking cash level would also weaken MagnaChip's credit profile. We could also lower the rating if the company's financial policy (such as shareholder returns) becomes significantly more aggressive than our base-case assumption. We could raise

...Volatility in operating performance remains a key risk to MagnaChip's credit quality. Despite showing earnings improvements in 2018, we expect MagnaChip's operating performance trend to remain volatile. This is mainly due to the company's weak market position, small scale in the semiconductor market, and the highly cyclical and fragmented nature of the industry. These challenges were evident in MagnaChip's operating losses reported for first-half 2019, owing to weak demand in the company's foundry business....

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