That only works if all costs are variable. Rent, administrative staff, fabs, R&D expense, are independent of sales volume in the short term. Suppose out of that $7, 4 dollars goes to direct labor and materials and 3 dollars are fixed costs (based on a budgeted projection of units sold). Selling a unit would be a $2 loss, not selling would result in $3 loss. It would then be to their advantage to sell as many as they can to spread out that fixed cost. Of course, over the long term the unit can't sell below cost and would have to be redesigned or discontinued. But over the short term, it can make sense to keep pushing units out at a loss.