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Apple Inc. (NASDAQ: AAPL) has nearly reached a supply-demand balance for the iPhone X, according to analyst Gene Munster of Loup Ventures. In the final week of December, average iPhone supply increased to 96% in U.S. Apple Stores. Online availability remains at three days from order placement to shipping.

Munster also stuck with his forecast for the iPhone X’s average selling price of $740, well above the consensus estimate of $705. That bodes well for Apple revenues and profits for its first fiscal quarter of 2018.

During the four full weeks of December, iPhone X availability rose from 25% in the week ending December 10, to 44% in the week ending December 17, to 75% for the week ending December 25, to 96% last week. Global availability online (in eight countries) was essentially unchanged at three days last week.

Munster also discounted news last week that Apple would cut iPhone production by 40%, from 50 million units to 30 million for the quarter ending in March. He based his doubts on remarks by Apple supplier Lumentum during its conference call on November 1.

Lumentum supplies about 90% of the vertical-cavity surface-emitting lasers (VCSELs) Apple uses for 3D sensing, augmented reality applications and facial recognition for the iPhone X. Munster noted:

[Lumentum] announced 3D sensing revenues of $40M for the Sep-17 quarter, adding they generated more revenue in the single month of October than they did in all of the Sep-17 quarter. They also expect monthly shipments to increase in Nov-17 and Dec-17. Most importantly management indicated their 3D sensing monthly run rate could remain at similar levels in the Mar-18 quarter, a conclusion drawn from customer feedback and order rates.

That could change, obviously, but Munster does not expect it to. Based on an estimated price of $7 per VCSEL per iPhone and a calculated $127 million revenue stream in the March quarter, Munster estimates a quarterly shipment total of around 65 million units. That’s hardly a 40% cut.

Finally, Munster notes that iPhone X availability was tight all through the December quarter. Expecting a production cut following a period of constrained supply is not typical. It is possible, he concedes, that Apple would maintain production of iPhone X while cutting production of other iPhone models. Even at that, however, iPhone X accounts for about 30% of iPhone volume, which should be enough to keep production levels strong.

Apple stock traded up about 1.2% Tuesday morning, at $171.29 in a 52-week range of $114.76 to $177.20.