Shares of Omnivision (NASDAQ:OVTI) were battered on Monday after reports surfaced this weekend suggesting that the company had lost a major contract to supply Apple with camera parts to Sony.

The company lost over 8.7 percent by mid-day, trading at $33.65 after shedding $2.54 on the Nasdaq.

Fears were kicked off after Sony (NYSE:SNE) CEO Howard Stringer told the Wall Street Journal that his company was gearing up to supply Apple with a powerful 8 megapixel camera, most likely for use in its forthcoming iPhone 5.

That contract has widely been regarded as belonging to Omnivision, given that it already provides the camera in the current iPhone 4, as well as previous model.

Some analysts are contending that the market is reading too much from Stringers comments, however.

Oppenheimer analyst Yair Reiner said there was no indication that the Sony part was destined for the forthcoming iPhone, and that his comments have been mis-interpreted.

Based on our channel checks, we continue to believe that OmniVision is Apple's main image sensor supplier and that its sensors will be used on the next iteration of the iPhone this summer, Reiner told clients.

On a more technical basis, Sony may simply not have enough capacity to supply Apple wit h the volume it needs.

Indeed, projections for the new iPhone 5 are large.

Market researcher Asymco found that every model of the Apple iPhone doubles production and sales of the previous generation. The current iPhone 4 is set to sell around 60 million units by the time its successor is rolled out, meaning the iPhone 5 could sell well over 100 million units.

Given that, Sony may not be the right partner.

OmniVision can get as many as 72,000 wafers per month working with Taiwan Semi , Needham & Co's Rajvindra Gill told clients on Monday.

Sony would struggle to 50,000 wafers per month for through till March of 2012, giving OmniVision a big capacity advantage, in his view.