TEXT-Fitch affirms International Rectifier IDR at 'BB'

Feb 6 - Fitch Ratings has affirmed International Rectifier Corp.'s
(IR) (NYSE: IRF) Issuer Default Rating (IDR) at 'BB'. The company
currently has no outstanding public debt or bank credit facility. The Rating
Outlook is Stable.

Despite current end market demand headwinds, Fitch believes the company's
long-term organic revenue growth prospects remain solid, driven by increasing
power management penetration. After 31.4% top line growth for the fiscal year
ended June 30, 2011, Fitch anticipates revenues will decline in the high single
to low double digits in fiscal 2012.

General weakness throughout Europe across all end markets, an ongoing indirect
channel inventory correction, and soft demand for computers and appliances
markets will more than offset modest strength in high-reliability productions
for commercial aerospace markets and rapid adoption of high-performance servers.
Nonetheless, the supply chain is closer to achieving more normalized inventory
levels, which Fitch believes drive could result in positive sequential revenue
growth for IR in the first half of calendar year 2012.

Weakened demand and inventory correction, as well as buffer inventory added in
anticipation of the company's enterprise resource planning (ERP) system
implementation should constrain factory utilization rates to less than optimal
levels for the year. Utilization rates in the mid 90s exiting fiscal 2011 will
remain in the 70s and below level for the current quarter, which will be a drag
on gross margins. Still Fitch anticipates gross margins will remain at or above
35% for the year and range from 35% to 40% through the intermediate term.

Fitch estimates free cash flow will be flat to modestly negative for fiscal
2012, driven by lower profitability and higher investments associated with the
ERP system implementation. Nonetheless, the ERP investment should drive profit
margin expansion beyond fiscal 2012. Capital spending levels should return to
the company's longer-term target of 10% of revenues or below. In conjunction
with planned manufacturing facilities consolidation, free cash flow should
remain modestly positive through fiscal 2014.

The rating and Outlook continue to be supported by IR's: i) technology
leadership and resultant leading share in a number of power management markets;
ii) addressable market growth driven by long-term secular trends of increased
electronics content and demand for energy efficiency; and iii) meaningful
customer and geographic diversification, including a strong presence in China
and other faster growth regions.

Ratings concerns continue to center on the company's: i) volatile historical
free cash flow; ii) substantial structural investments in research and
development (R&D) and capital spending; and iii); small revenue base in its sole
focus on the discrete power management market, which includes several
participants with greater scale and financial flexibility.

Fitch believes positive rating actions could result over the intermediate term
from more consistently positive annual free cash flow, likely from solid organic
revenue growth and structurally lower investment requirements, which Fitch
believes could be achieved through increased outsourcing.

Negative rating actions could result from:
--Lower than industry-level top-line growth, suggesting a weakening of the
company's technology leadership position.
--Consistently negative free cash flow likely driven by sustained profitability
erosion or meaningfully higher investment levels to counter competitive
pressures.

As of Dec. 31, 2011, Fitch believes IR's liquidity was sufficient and supported
by nearly $386.8 million of cash, cash equivalents and short-term investments.
IR has no revolving credit facility. Fitch expects annual free cash flow to
range from slightly negative to modestly positive over the intermediate term,
driven by the company's small revenue base and relatively fixed investment
requirements. The company has no public debt and Fitch has no expectations for
near-term debt issuance. Nonetheless, depending upon uses of proceeds, Fitch
believes IR can issue debt in line with historical amounts of approximately $500
million-$750 million without negatively affecting the IDR or outlook. This would
equate to total leverage (total debt to operating EBITDA) of 3x-4x.

Contact:

Primary Analyst:
Jason Pompeii
Senior Director
jason.pompeii@fitchratings.com
+1-312-368-3210
Fitch, Inc.
70 West Madison St.
Chicago, IL 60602

Secondary Analyst:
John Witt, CFA
Senior Director
john.witt@fitchratings.com
+1-212-908-0673

Committee Chairperson
James Rizzo, CFA
Senior Director
+1-212-908-0548

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 12, 2011);
--'Rating Global Technology Companies Sector Credit Factors' (Sept. 20, 2010).

Applicable Criteria and Related Research:
Corporate Rating Methodology
Rating Global Technology Companies - Specific Rating Factors