This is a question we got in the Halite email account - thought the answer was worth sharing publicly.
Even the basic bots do timeout sometimes. Here's a quick explanation why:
When you first submit the starter bot you start at the bottom of the leaderboard. Your bot will do well, and it will move up, so it'll start playing better and better bots. At some point, it will start playing against folks who are a bit better than the starter bot. These folks are so good that they will make lots and lots of ships. The navigate function for the starter bot is too naive to handle lots of ships, so it times out. This will drop you down to more or less your own level, and then the starter bot should stop timing out as ofter.
There are many ways to keep your bot from timing out - start playing around!