Bernstein: Semiconductor Equipment Not Tied to Memory; History Shows Two Divergences

According to Chaoxiang Research and a Bernstein report dated July 13, the memory sector has outperformed semiconductor equipment by 661 percentage points since June 2025. This has led to a widespread market concern: if memory corrects, will equipment follow? Bernstein responded to this question using a decade of historical data, showing that equipment and memory are not highly correlated, with their long-term correlation remaining low. Moreover, equipment has previously delivered independent performance during two periods of memory weakness. Both divergence periods lasted approximately two years, during which equipment significantly outperformed memory. From 2019 to mid-2025, memory underperformed equipment for six consecutive years, only catching up in February 2026 after a cumulative 36-fold gain over 15 years. Since then, memory has accelerated sharply, accumulating extreme excess returns. If mean reversion occurs, equipment could benefit relative to memory. SK Hynix has announced a $67 billion capacity expansion plan, ensuring certainty in equipment orders. Bernstein maintains an Outperform rating on Applied Materials (AMAT), Lam Research (LRCX), and ASML, with target prices of $525, $340, and €2,300, respectively.