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TrendForce expects Apple's current-gen iPhone line is struggling. Source: Apple

If you follow technology, everything Apple (NASDAQ:AAPL) does tends to be overstated. There's a cottage industry of journalists churning out headline-grabbing articles about the iPhone maker daily. As such, every move from the iPhone maker tends to be overstated. However, Apple's second-quarter earnings may be the most-important report the company has had in years.

After releasing the iPhone in 2007, the device quickly became Apple's top product. Over the last year, approximately two-thirds of Apple's top line was due to iPhone sales. iPhone unit growth significantly slowed to 0.41%. On a revenue basis, Apple grew its iPhone revenue less than 1% last quarter on a year-on-year basis, a much larger slowdown than the 36% the company produced in the prior quarter.

Source: Apple's quarterly reports. Revenue figures in millions.

Even Apple CEO Tim Cook admits the company expects unit sales to drop in the second quarter. But if the newest report from Taiwan's TrendForce is correct, iPhone shipments are not just dropping -- they're cratering.

A drop of 31%?
According to TrendForce, Apple is expected to report it shipped 42 million iPhone units in the first quarter (Apple's second fiscal quarter). For most phone vendors, 42 million high-end units would be a great year but Apple is no ordinary company. In last year's corresponding quarter Apple reported shipping 61.2 million units. TrendForce estimates Apple shipped 31% fewer units on a year-on-year basis. If correct, Apple appears well on its way to an underwhelming earnings report.

Trendforce's report is bad news all around for Apple. The market research firm reports the overall smartphone market declined 1.3% in the first quarter, which means Apple significantly underperformed the entire market. Additionally, TrendForce estimates Apple will ship 213 million units in the calendar year, down 10% from last-year's total.

On the other hand, TrendForce notes Samsung (NASDAQOTH:SSNLF) shipped more units than expected as a result of moving up the Samsung Galaxy S7 and Galaxy S7 Edge's release date to the first quarter and increased promotional activities. TrendForce upgraded its projections of Samsung shipments to 316 million units this year, which is roughly the figure it shipped last year.

What's Apple without iPhone growth?
Even though Apple has attempted to bring new products and services to the fold, the company continues to be tied to the iPhone. As the graph above shows, the iPhone has grown from 57.1% of Apple's total revenue haul two years ago to 68.1% last quarter. During this period Apple's introduced Apple Music, Apple Watch, and refreshed Macs and iPhones. However, Apple's future remains tied to the iPhone.

TrendForce's estimates appear lower than other firms. Earlier Credit Suisse analyst Kulbinder Garcha cut the firms estimates of iPhone sales from 55 million to 48 million. Piper Jaffray also lowered estimates to 55 million, down from prior predictions of 62.5 million.

This quarter will provide insight into how the iPhone will perform now that the device's hyper-growth period has passed. Apple appears undervalued on many metrics, which points to the fact many investors expect slower growth going forward. However, if Apple reports a 31% unit shipment decrease in its most important product, it could further depress the company's valuation multiples.