KGI Securities is downbeat for the iPhone’s future. In Ming-chi Kuo’s latest sales forecast for Apple’s most prized item, the analyst has forecast lower shipment totals for the first two quarters of the company’s fiscal 2017 compared with this year’s results.

Keep in mind that we’re talking shipments — indicative of Apple’s supply health and anticipation of demand — and not sales numbers (actual demand). The following numbers are in millions of units.

Period Forecast 2016 shipments 2016 sales
Q1 40-50 51.2 74.8
Q2 35-40 40.4 51.2

In the first quarter going on right now, concerns continue hover over the 4.7-inch iPhone 7 — the iPhone 7 Plus does have two cameras after all — and unsteady growth in China while the second quarter sees no need for an upgrade to the iPhone SE. Why?

“[…] in order to keep gross margin at a high level and to avoid cannibalization of high-end models, we do not expect Apple to launch an upgraded iPhone SE in 2Q17,” Kuo wrote.

Infinite Loop might be willing to cannibalize itself for the sake of keeping market share, but if it does so at the cost of padded margins, it might as well not bother.

Many parts suppliers will be negotiated down for price as shipment numbers decline departing from the holidays. The few that will be able to command their positions will be Samsung, which supplies the RAM and storage memory that are in high demand at the moment, and TSMC as Apple already contracted its rate for the company to produce the A10 Fusion chipset.

It’s not clear how current rumors about the iPhone 8’s design, which are told to include more glass and more display, will affect sales in any minuscule way. We usually are able to get some signal with a fourth quarter forecast, which includes the pre-orders and initial sales period of the new device.

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