We’ve started manufacture!

liz
Raspberry Pi

January 10, 2012

Raspberry Pis started being made a couple of days ago, but I was forbidden to tell you about it until signed contracts and receipts for payment had arrived – it’s been killing me, especially since I’ve had tens of you asking me when manufacturing would start every day for the last few weeks. I am not good at keeping secrets.

This means that the first units from the first batch will be rolling off the line at the end of January. This first batch will consist only of Model Bs, although you will be able to buy Model As later on. Details about whether we’ll wait for all 10k to come off the line before starting sales, and about what date we’ll be starting on, will come later; so that gives you something else for you to shift around nervously on your chairs about for at least another week or so. (Please stop emailing me about it. Please.)

Unfortunately, we’ve not been able to manage manufacture in quite the way we’d hoped. As you will know if you’ve been reading the forums and the articles on this website, the Raspberry Pi Foundation had intended to get all its manufacture done in the UK; after all, we’re a UK charity, we want to help bootstrap the UK electronics industry, and doing our manufacturing in the UK seemed another way to help reach our goals.

We investigated a number of possible UK manufacturers, but encountered a few problems, some of which made matters impossible. Firstly, the schedule for manufacture for every UK business we approached was between 12 and 14 weeks (compared to a 3-4 week turnaround in the Far East). That would have meant you’d be waiting three months rather than three weeks to buy your Raspberry Pi, and we didn’t think that was acceptable.

Secondly, we found that pricing in the UK varied enormously with factories’ capacity. If a factory had sufficient capacity to do the work for us, they were typically quoting very high prices; we’d expected a delta between manufacture pricing between the UK and the Far East, but these build prices not only wiped out all our margin, but actually pushed us into the red. Some factories were able to offer us prices which were marginally profitable, but they were only able to produce at most a few hundred units a month; and even then, we were doing better by more than five dollars per unit if we moved that manufacture to the Far East. When you’re talking about tens of thousands of units per batch, losing that sum of money for the charity – a sum that we can spend on more manufacture, more outreach work and more research and development – just to be able to say we’d kept all the work in one country, starts to look irresponsible.

I’d like to draw attention to one cost in particular that really created problems for us in Britain. Simply put, if we build the Raspberry Pi in Britain, we have to pay a lot more tax. If a British company imports components, it has to pay tax on those (and most components are not made in the UK). If, however, a completed device is made abroad and imported into the UK – with all of those components soldered onto it – it does not attract any import duty at all. This means that it’s really, really tax inefficient for an electronics company to do its manufacturing in Britain, and it’s one of the reasons that so much of our manufacturing goes overseas. Right now, the way things stand means that a company doing its manufacturing abroad, depriving the UK economy, gets a tax break. It’s an absolutely mad way for the Inland Revenue to be running things, and it’s an issue we’ve taken up with the Department for Business, Innovation and Skills.

So we have had to make the pragmatic decision and look to Taiwan and China for our manufacturing, at least for this first batch. We are still working hard on investigating UK possibilities; at the moment, we’re investigating an option which would mean that all the Model As (whose demand we expect to be much lower than that of the Model Bs) will be built in the UK, and at the moment that’s looking quite do-able, although it’s not as efficient economically as doing it in Asia. I’ll fill you in on how that goes later on.