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For the two-week short-interest reporting period that ended December 29, the number of shares short in Intel Corp. (NASDAQ: INTC) dropped by 27.3% (more than 36 million shares) to 116.41 million, representing just 2.5% of the stock’s total float. At an average trading volume of around 31 million shares a day, days to cover have settled at four.

The share price rose about 3.6% in that same two-week period, likely prompting the massive selloff on Intel shares. Just a few days later, the company was forced to reveal that it had found two flaws in every processor chip it has sold for the past two decades, at least.

From a closing high of $46.16 on January 2, the stock has dropped 7.9% to close at $42.50 most recently. The shorts who dumped their shares before January 2 left a lot of cash on the table. Will they place their bets again, believing that the share price collapse isn’t over yet?

The two flaws — called Meltdown and Spectre — will hit server customers hardest. The recent software patch released by Microsoft could degrade the chips’ performance by as much as 30%. Intel’s corporate customers may have to choose between installing Microsoft’s fixes or taking the performance hit that installing those fixes will mean.

That is certain to irritate some customers more than others. Those who choose to install the fixes and then have to buy more servers to get their performance back to where it once was are likely to be particularly unhappy.

Will these customers turn to rivals AMD or ARM? One Intel customer that provides cloud computing services told Reuters yesterday that if Intel doesn’t “step up and do something to make this right then we’re going to have to punish them in the marketplace” by turning to another vendor.

Other chipmakers — Qualcomm and Cavium, for example — are already working on ARM-based processors to compete with Intel. The big issue for these vendors is how much code needs to be rewritten for applications that currently run on Intel chips.

Either solution is going to be costly both for Intel and its customers. But Intel is likely to fare the worst.

Shares closed at $42.50 on Wednesday, down 2.6% on the day. The stock’s 52-week trading range is $33.23 to $47.64, and the 12-month consensus price target is $47.08.