Raspberry Pi's profits are up. So is its DRAM bill

Personal tech

Forecasts earnings well ahead of expectations, even as it taps credit facilities to lock in memory supply

The AI gold rush is proving good for Raspberry Pi's bottom line, but it's also forcing the low-cost computer maker to borrow money to keep enough memory chips in stock.

In a trading update published on Friday, Raspberry Pi said it expects full-year earnings to come in significantly ahead of market expectations after a stronger-than-expected first half driven by healthy demand, higher average selling prices, and the benefit of lower-cost memory inventory purchased earlier.

Raspberry Pi expects first-half profits of at least $38 million from shipments of more than 4 million units, putting it close to the roughly $42 million analysts had forecast for the entire year.

Investors piled in after the update, pushing Raspberry Pi shares up nearly 20 percent and more than tripling the Cambridge-based firm’s value since January.

The most interesting detail, however, was tucked away beneath the headline numbers.

Raspberry Pi warned that pricing and availability of DRAM and non-volatile memory remain challenging, a familiar complaint across the industry as AI infrastructure builders continue vacuuming up components. To ensure it meets production targets, the company said it intends to make strategic purchases of memory inventory and will "appropriately utilize" its debt facilities throughout the year.

Not so long ago, Raspberry Pi's biggest supply-chain challenge was making enough boards for eager tinkerers and classrooms.

The firm increasingly looks less like a hobbyist hardware vendor and more like a company navigating the same semiconductor supply chain headaches as much larger technology firms. Earlier this year it raised prices on some products as memory costs climbed, while executives have repeatedly pointed to component availability as a key business risk.

At least Raspberry Pi has a problem that many hardware vendors would happily take. Customers are still buying enough boards to keep the memory buyers busy.

Still, Raspberry Pi said first-half profitability benefited from lower-cost DRAM inventory acquired before memory prices moved higher. As that stock is consumed, margins are expected to moderate during the second half of the year. Still, management seems willing to sacrifice some profitability to secure supply.

It turns out the AI boom affects more than datacenter operators. Even Raspberry Pi is now playing the DRAM market. ®