TF International’s Ming-Chi Kuo has cut his estimates for iPhone XR shipments significantly, from 100 million to 70 million, through September 2019.  Kuo blames negative consumer confidence due to the ongoing trade war, competition from Huawei Mate 20 particularly in emerging markets, and customers coveting features like dual-camera.

Kuo has not lowered his total fourth quarter iPhone estimates of around 80 million units, as he believes the fall in XR shipments will be offset by higher sales of the XS series and legacy models like iPhone 8 and iPhone 7. However, he forecasts a decline looking into 2019.

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For the first quarter of 2019, January to March, Kuo believes that Apple will see a year-over-year decline in iPhone shipments. He predicts shipments in the 47-52 million range, compared to 52 million sold in the first quarter of 2018. Kuo’s new predictions fly in the face of his pre-launch expectations, where he believed the XR would outsell the iPhone 8 series in the same period.

Apple has stopped reporting unit sales for its products, so the company quarterly earnings reports will no longer be able to support or refute analyst predictions concretely, although ASP analysis may shed some light on product mix.

Kuo’s concerns echo a report from Nikkei earlier this month that said a ramp up of iPhone XR production had been cancelled.

Kuo seems to believe that the XR is too expensive and customers are awaiting a more affordable version of the XR in the future, or a XR with upgraded features like narrower bezels and dual-camera modules. Whilst Apple’s financial performance is not impacted in Kuo’s model for the holiday quarter, he warns that primary iPhone XR component suppliers will be exposed as they cannot benefit from the expected increase in XS and legacy iPhone sales.

It’s also worth pointing out that Apple can report increased bottom line revenue and profits on lower shipments if average selling price of those units continues to rise. We saw in the last earnings report that iPhone sales were flat but revenue rose 26%, with the launch of more expensive high-end models like the iPhone XS Max. Even the entry-level iPhone XR is $50 more than the cheapest flagship iPhone 8 last year.

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