So, operating profits can rapidly reduce when production stops and there are no new sales due to the incident. A senior official from the industry said, 'The more smartphones a company produces, the lower fixed costs it will achieve. When a company has low sales, it makes more losses. The biggest problem is sales suspension of the new handset. The figure is calculated based on 1 million won (US$895) per unit and subtracting Samsung Electronics' profits. Yesterday industry sources told Business Korea that 'Samsung Electronics is likely to see a 1.5 trillion won (US$1.34 billion) loss on account of the recalls. This, in turn, will create the contagion effect to component companies, leading to a vicious circle in terms of price competitiveness and profit.' 'Also, its distribution and sales will be somewhat affected by Hanjin Shipping's issue. One report notes that 'As Samsung Electronics has decided to recall 2.5 million units of the Galaxy Note 7 due to a flaw in its battery - its performance will have an adverse effect.' Today several more reports have surfaced in Korea today discussing the depth of the problem that is now in play. On Sunday, Patently Apple posted a detailed report titled ' Korean Press Reports the Exploding Note 7 is a Severe Blow to Samsung that could help the iPhone 7.'
