The story of getting a $25 computer made shows how global tech supply chains are evolving
The $25 Raspberry Pi computer was designed in the UK, but how it came to be built in China is an illustration of how global supply chains for technology have changed.
Raspberry Pi is a Linux computer produced by the Cambridge-based Raspberry Pi Foundation. Not only will the credit card-sized device – which packs a 700 MHz ARM processor within a Broadcom BCM2835 system-on-a-chip (SoC) and 128MB of memory - be one of the cheapest computers available when it launches this month – but it is also designed to encourage kids to learn coding by booting directly into programming environments for computer languages such as Python and C.
Board design work was carried out in Cambridge, and the foundation had hoped to manufacture the boards in England, but Eben Upton, director of the Raspberry Pi Foundation, said that the economics of the global supply chain made it all but impossible for the computer to be manufactured outside of China.
”We tried really hard to build these in the UK and in the end it just wasn’t going to fly,” he said.
”All of the component inventory is in China, the whole global supply chain is set up to take components manufactured in factories in China, and send them to other factories in China, which assemble them into products and ship them to the west.
”If you try and fight against that and set up a production system, which isn’t aligned with those flows of materials then you find you end up paying. Your component lead times go up, your component costs go up, your flexibility goes down. You can’t do so much chip manufacture and your process becomes less lean.”
The foundation also ran into tax issues when trying to manufacture the boards in England, namely that while excise duty is charged on certain electronic components imported into the UK it is not on finished computer products – making it slightly cheaper to ship in a completed board than it is individual components.
”Our product is zero-rated so when we imported from China we don’t pay any excise duty because we’re importing a finished product,” he said.
”If we built this in the UK then we, at least nominally, would have to start paying excise duty.”
However Upton said that ultimately the excise duty was only a small obstacle compared to the larger issues related to the supply chain and the higher cost of labour in the UK. The foundation needs to build up capital from the sale of the first run of 10,000 Raspberry Pi’s in order to have funds to pay for the next batch of 10,000, as well needing funds to pay back the investment made by the foundation trustees and investors.
”We do need to make a profit, we can’t sell them at a loss or a break even, you look at it and say we’re either going to have to put the price up or take it offshore,” he said.