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Apple Supply Chain Cuts: What the Analysts Are Saying

Apple Inc. To Unveil iPhone 6S And Apple TVApple Inc. To Unveil iPhone 6S And Apple TV
Tim Cook introducing the iPhone 6s and 6s Plus Photograph by David Paul Morris — Bloomberg via Getty Images

Over the past week, I’ve seen several reports about iPhone component makers cutting their production. (Whether they also make components for other manufacturers’ smartphones is unclear.)

Where there’s smoke there could be fire, and some analysts have taken these reports as a sign that demand for the iPhone—the source of so much of Apple’s revenue—is “disappointing.”

Others aren’t buying it, and they’re not afraid to say so.

Below are excerpts from the analysts’ notes we’ve seen, divided into two warring camps.

THE BEARS:

John Vinh, Pacific Crest: iPhone 6s Sell-Through Continues to Disappoint; We Still See Near-Term Risk for Apple Supply Chain. Our latest monthly carrier surveys, in conjunction with supply-chain feedback, indicate disappointing iPhone sell-through. This is resulting in rising inventories and increased risk to component supplier outlooks for Q4/Q1. In particular, we see risk to forward estimates for ARMH, AVGO, QRVO and SWKS. Until we get a reset in expectations, we expect Apple supply-chain names to remain range-bound… Thus far, four out of six key Apple suppliers have missed earnings estimates; the two that exceeded estimates were Cirrus Logic, which increased its content on the iPhone 6s by over 100% vs. the iPhone 6, and InvenSense, whose consensus numbers had already been derisked. (See Here’s some spectacularly bad Apple Investment Advice.)

Kulbinder Garcha, Credit Suisse. Supply-chain cuts, weakness, then opportunity. Apple has lowered its component orders by as much as 10% according to our teams in Asia. The cuts seem to be driven by weak demand for the new iPhone 6s, as overall builds are now estimated to be below 80mn units for the December quarter and between 45-50mn units for the March quarter. We lower our CY16 units to 222mn from 242mn to reflect this and assume 235mn for 2017 (6% growth y/y)… So is it the end? We believe not.

THE BULLS:

Daniel Ives, FBR: Here We Go Again on Apple; Reiterate Outperform. The usual “fire in a crowded theater” comments this morning from competitors are not a surprise to us as we saw the same knife fight develop going into the much contentious September quarter and Apple proved the skeptics wrong yet again. We expect a very strong December quarter/holiday quarter on healthy iPhone 6s demand… Apple and Cook have a bullseye on their back and the Street continues to fire their predictable bearish bullets as investors fret about tough comps and the “iPhone 6 hangover” impact.

Brian White, Drexel Hamilton. Only Our Apple Monitor Outperforms Seasonality in Taiwan During October. As of this morning, all of the companies in our Taiwan ODM, PCB and Component Monitors have reported sales for the month of October. All three of these Monitors were weaker than average seasonality in the past. Yesterday, we highlighted stronger than seasonal performance from our Apple Monitor and slightly weaker than seasonal performance for our LCD Monitor. Within our Taiwan Monitor universe, only our Apple Monitor delivered better than seasonal performance during the month of October. In our view, Apple remains one of the most undervalued technology stocks and is positioned better than ever this holiday season.

Trip Chowdhry, Global Equities. Many have asked us about [“Apple shares fall on report of iPhone order weakness“]. There is nothing new here. It is a well known fact that iPhone sales will slow in 2016, and Apple’s revenue and EPS estimates already reflect this.

I’m leaning toward the bulls on this one. In his fourth quarter earnings call two weeks ago, Apple CEO Tim Cook seemed pretty confident that iPhone sales this holiday quarter would beat last year’s record. He didn’t sound like someone who was, as the bears suggest, cutting component orders 10%.

Apple’s shares (AAPL) closed Tuesday at $116.77, down $3.80, or 3.15%, on a day when the Dow was up.

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at fortune.com/ped or subscribe via his RSS feed. You might also want to subscribe to Data Sheet, Fortune’s daily newsletter on the business of technology.

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