You probably hit the nail on the head. The stock first fell under $5 yesterday, so today margin calls would have gone out. That may indicate a good buying opportunity.
As to relationships between MU and WFR, I contemplate them all the time. There are many similarities, some differences, and some inter-relationships. As you point out, both are high-tech commodities. There are minor quality differences between producers, but cost of production is critical. For WFR the quality is more of an issue because WFR has a reputation as the low quality producer.
Another similarity is that in DRAM as in wafers the producers have engaged in a high stakes game of chicken. But here is an important difference. MU has established a position as the low cost producer so its losses have been much less than the competition, and by increasing yields it has steadily increased market share even as competitors have limited production in order to get prices up. There is no evidence that WFR's competitors are hurting more than WFR, or even that they are hurting as much. Thus in the wafer manufacturing business if anyone will back down or fold up, it would seem to be WFR.
As for inter-relationships, for a long time I left MU alone and played WFR because I believed that as DRAM producers ramped up production, each trying to outproduce the others the primary beneficiaries would be the wafer producers. But the wafer plants created their own overcapacity problems. Now I am playing the other way. As DRAM producers try to limit production so as to keep prices up, less wafers are consumed, and WFR is hurt worse. Of course equipment producers will also pay the piper as equipment is only ordered to move to smaller feature sizes, and not to increase output volumes.
Another similarity may also be in the making. If I recall, customers of WFR loaned WFR money in 1996 to get WFR to expand capacity, luring WFR and other wafer suppliers into the current over capacity situation, and creating the current climate, which of course is beneficial to the wafer customers. Now there is talk that INTC may loan money to MU to expand, which may increase the DRAM glut, driving down prices yet again, and benefiting INTC by lowering the cost of DRAM further so that computers are cheaper.
Carl
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