The way you explain it means two things. First the investment needed to built the necessary production capacity, but that is not production cost (production cost are a result of this via hourly rates and costs per piece). The ability to cale from a prototype stage to serial production is crucial here, and yes damn expensive and risky. One wrong step and the company doesn't even have to care about inventories.

Inventory kicks in once the company has scaled successfuly. And then iventories are more curial to success than production costs in terms of company survival. Market entry is won with product costs low enough to make a profit. Once in the market you live and die by cash expanses, inventories are huge part of this. Espacially since hardware becomes outdated pretty fast, high levels of exess stock can basically mean death for a young company.

But all that is one of the schleps coming with hardware, and bulding such an operation from scratch is a really interesting thing to do.