Apple analyst Ming-Chi Kuo has significantly reduced his forecast for iPhone unit shipments in the upcoming quarters. In a new report today, Kuo says that lower demand for iPhone XR means he sees iPhone sales falling year-over-year significantly.

For calendar Q1 2019, Kuo predicts sales in the 38-42 million range (down from 50 million in the year-ago quarter for 2018). Kuo also sees significantly lower iPhone sales for 2019 compared to current consensus estimates …

Note that Kuo is reporting based on the calendar quarterly period, January – March. Apple’s financial reports are based on the company’s fiscal quarter, which is three months adjusted from the calendar. Apple’s Q1 2019 earnings represent the holiday period October – December.

Kuo’s 20% lower forecast would therefore be predicting Apple’s fiscal Q2 2019 earnings.

Kuo expects total iPhone shipments for 2018 in the 210 million range. Most notably, he forecasts 188 to 194 million iPhone sales for the whole of 2019, representing a 5-10% decline. This is a significant fall and way below analyst consensus, which is well clear of the 200 million mark.

Kuo says that the higher proportion of older iPhone models (like the iPhone 7 and iPhone 8) cannot offset sales weakness in iPhone XS and iPhone XR when the holiday season subsides.

We have seen Apple do many rounds of aggressive marketing for iPhone XR and iPhone XS in the last few weeks, which seem to support the view that iPhone sales are not as strong this cycle.

Kuo initially expected 20-25 million shipments of iPhone XR for the Q1 2019 period, and has now revised that downward to 15-20 million.

Due to higher average selling price of end products, Apple’s iPhone income will not be affected as much by shipment declines as iPhone component suppliers. Kuo estimates that he will not have visibility into the 2019 iPhone lineup for a few more months.

Apple will not report unit sales going forward, so investors will be looking closely at iPhone bottom-line revenue to deduce the health of Apple’s smartphone business. Apple as a company has shifted towards Services expansion to provide ongoing revenue and profit growth.

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