The rating on Korea-based MagnaChip Semiconductor LLC (MagnaChip), the former nonmemory chip division of Hynix Semiconductor Inc. (B+/Positive/--), reflects the company's exposure to a highly competitive and cyclical industry and its substantial debt burden. MagnaChip produces CMOS image sensors for cell phones, display driver chips for flat panel displays, and provides foundry chip manufacturing services. The company has a relatively good position within certain market segments with favorable growth prospects, but faces severe competition from several strong competitors. After missing a major sensor product cycle, exacerbated by weak analog and power end markets in 2006, MagnaChip is working to recover its market share under new leadership. Still, revenues are depressed, factory utilization levels are low, profitability is weak, and cash
