UPDATE 1-Hynix sees potential Q4 loss on chip price fall

(Adds details from term sheet, Hynix response, updates shares)

SEOUL, Dec 11 (Reuters) - Hynix, the world's No. 2 memory chip maker, forecast the potential for operating and net losses in the fourth quarter on steep declines in memory chip prices, according to a term sheet issued by underwriters for the company.

South Korea's Hynix Semiconductor Inc (000660.KS: Quote, Profile, Research, Stock Buzz) said in the sheet for its $583.4 million bond issuance, obtained on Monday by Reuters, that the average selling price of its main products had fallen more rapidly than anticipated "due to adverse conditions ... in recent months."

"Primarily due to these price declines, in the absence of a market turnaround in semiconductor prices, we will likely record operating and net losses for the fourth quarter of 2007," the term sheet stated.

Hynix said the forecast was part of an offering circular that listed all the potential risks associated with the issuance.

"We mentioned the potential loss as one of the many risk factors, as requested in these cases," said James Kim, senior spokesman for Hynix. "We still have a few weeks to go before the quarter ends."

Hynix shares fell 1.85 percent to close at 26,500 won, against a 0.98 percent rise in the wider market .

(Reporting by Rafael Nam in Hong Kong and Kim Yeon-hee in Seoul; Additional reporting by Marie-France Han; Editing by Sei Chong)