Nov. 3 (Bloomberg) -- Hynix Semiconductor Inc., the world's second-largest memory chipmaker, had its debt rating cut to three levels below investment grade at Moody's Investors Service, which cited the company's weaker credit profile and earnings.

Hynix's corporate family and senior unsecured bond ratings were cut to Ba3 from Ba2, affecting about $500 million of debt, Moody's said in a statement today. Moody's has a negative outlook on the ratings, it said.

The downgrade brings Hynix's ratings at Moody's in line with those assigned at Standard & Poor's, which last week changed the outlook on the South Korean chipmaker's debt to negative. Hynix on Oct. 30 reported its biggest loss in at least seven years after a glut drove down prices of computer memory chips.

``This rating action reflects Hynix's weakened credit profile and operating performance as a result of the weaker-than- expected state of the memory industry, including severe drops in prices for global dynamic random access memory products,'' Ken Chan, a Moody's vice president, said in the statement.

Hynix said last week it may push back part of this year's spending to 2009 as chip prices slumped to record lows, causing the company to join Samsung Electronics Co. and Toshiba Corp. in posting weaker results. Taiwan's Nanya Technology Corp., Powerchip Semiconductor and Japan's Elpida Memory Inc. have reported losses in the past month because of falling prices of computer-memory chips.

Supply of the computer chips known as dynamic random access memory will exceed demand by 7.5 percent next year, worsening from a 2 percent glut in 2008, UBS AG said last week.

``We expect the pressures for an industry consolidation to rise into 2009,'' UBS's Robert Lea, who's based in Seoul, wrote in an Oct. 31 report. ``We see risks that undercapitalised, tier- two players might not survive the coming difficult period.''

A lower debt rating increases the perceived risk of a company's inability to pay debt and can raise a company's borrowing costs.

To contact the reporter on this story: Kevin Cho in Seoul at kcho2@bloomberg.net

Last Updated: November 3, 2008 03:13 EST