Tower Semi Shorts Hit One-Year High Before Monday's Print

Short interest in TSEM has nearly doubled over the past month, reaching its highest level in at least a year heading into Monday's earnings release.

The positioning shift is the sharpest angle on the stock right now. Short interest has climbed 90% over the past 30 days to 4.8% of the free float, with the bulk of that build landing in a single week: shares short jumped 14% in the week ending October 29. The contrast with borrowing conditions is telling. Availability remains extremely loose at 1,294%, meaning the pool of lendable shares is roughly 13 times larger than current short positions. Borrow costs are running at just 0.56% annually. This is not a stock where shorts are scrambling to find supply. The demand for short exposure is new and deliberate, not a squeeze-driven overhang. Options are modestly more defensive than usual, with the put/call ratio at 1.13 against a 20-day average of 1.02, but the z-score of 0.51 places that well within normal range.

The price action gives the short build context. TSEM fell 11% on October 30 alone, and has dropped 29% over the past month. That decline has pushed the stock to $166.48, a level that sits far below where most analysts are anchored. The consensus among seven buy-rated analysts carries a mean target of $313, though the most recent formal action was Mizuho's Outperform initiation in late September at a $300 target. Barclays also initiated at Overweight with a $310 target in mid-September. The bull case rests on $1.3 billion of contractual FY27 silicon photonics revenue backed by $290 million in customer prepayments, which management has called a floor, along with a $920 million capacity buildout anchored by a new 12-inch fab in Uozu. Bears point to customer concentration, with the top five accounts contributing roughly 44 to 47% of revenue in recent years, an ongoing lease dispute at Newport Beach Fab 3 running through March 2027, and structural risk from the industry's eventual shift to co-packaged optics. The stock's EV/EBITDA has compressed by about 1.2 turns over the past month, reflecting the price decline.

The sell-off has arrived in the same week that the stock was sharply outperforming its peers on a longer horizon. TSEM's closest correlated names, including SMTC, LSCC, and MTSI, gained 13%, 7%, and 10% respectively over the past week. TSEM lost 0.6% over that same stretch. The reversal is stark: an earlier ORTEX note recorded a near-doubling year-to-date return for the stock as recently as late September, compared with mid-single-digit to low-double-digit gains for the peer group. That divergence has now inverted sharply around the earnings window. The prior print, in August, produced a one-day decline of 9.9% followed by a five-day recovery of 6.5%.

BlackRock filed a fresh Schedule 13G on October 27, disclosing a 6.8% stake of around 7.8 million shares. Several Israeli institutional holders, including Harel, Migdal, and Menora Mivtachim, also appear as significant owners as of September 30, reflecting the stock's dual character as both a Nasdaq-listed semiconductor name and a core Israeli institutional holding. Stakes are as last disclosed around the 5% threshold; holders dropping below that level may not file again.

Monday's print will test whether the SiPho revenue ramp and margin expansion story holds at a price point roughly half what analysts established their targets at.