Allwinner R8 Module Datasheet and Price. Is the $9 C.H.I.P Computer Selling at a Loss?

Allwinner R8 Cortex A8 processor, very similar to Allwinner A13, but optimized for IoT applications, was first unveiled via the $9 C.H.I.P computer crowdfunding campaign, but at the time we did not have that many technical details. However, Olimex had already made several Allwinner boards in the past, such as A20-OLinuXino-LIME, so they decided to investigate if they too could use Allwinner R8 processor, or rather Allwinner R8 Module (R8M) with R8 SoC, 4/8GB NAND Flash and 512 MB RAM.

Allwinner R8 Module Block Diagram

So they managed to get R8M datasheet, and got quoted $4.8 for Allwinner R8 and $16 for Allwinner R8M with 512 MB RAM and 8GB NAND Flash for 5,000 unit orders.

Wait… If R8M module is $16, how can C.H.I.P sell it for $9? One difference is that C.H.I.P module only has 4GB NAND flash, but the module quoted to Olimex appears to come with 8GB flash, but it’s not does not explain the price difference. At first, I thought they did like some eBay sellers: making it on shipping. As while shipping is $5 to the US, it was $20 to the rest of the world, although they’ve found was to reduce this to $12 to $15 at the end of the campaign. But I’ve been explained the reason for the higher cost is probably because they manufacture it in China, ship it to the US, and have it handled by a US logistic company (Backerkit) from there.

Olimex estimates the BoM cost of C.H.I.P should be close to $20, so that means they may be losing around $10 for each board sold. So the $9 was mainly for marketing purpose, but a potential issue is that it worked on they raised over $2 millions, and “we sell at a loss, but we will make it on volume” does not really work in real life. So does that mean the campaign is at risk as Next Thing Co. may not have enough funds to manufacture the board? Not necessarily, as many backers also pledged for accessory boards (HDMI adapter ,VGA adapter, and others) which are likely to have a bigger margin, and the average pledge is $52.37, so they might even be able to make some profits. But if money is tight, delays might be likely. We’ll find out late 2015, early 2016, unless Next Thing Co. decides to address the issues raised by Olimex and others.

Thanks to Jon and Brian for the post idea.

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