Leading semiconductor companies are insisting on more order transparency from customers to avoid another slump.
They are tying customers to tighter contracts and requiring more detailed forecasts to avoid the inventory problems that have contributed to the speed and depth of the current downturn.
Next month, Toshiba will introduce a computer system to let its larger customers place orders directly with factories. Fairchild Semiconductor has implemented a system that gives weekly updates on order levels from 40% of customers to help plan output.
Alf Boersig, vice-president of Toshiba Electronics Europe, says more transparency between suppliers and customers is vital to avoid future gluts.
"There is inventory everywhere. Industry has to learn about this. We need to deal with each other because investments are so expensive nowadays," he said. "Rather than monitoring billings and bookings, we need to monitor inventories. If we could do that, we would not have these sudden surprises."
Boersig says the new supply management system will integrate the entire chain.
During the past six months, Fairchild has rolled out a reporting system that gets customers to predict orders 26 weeks in advance.
Tom Hudson, corporate contracts director of Fairchild, says the increasing use of contract manufacturing had made it more difficult to use traditional techniques to plan production: "As the CEMs have inserted themselves, the suppliers have lost their visibility of the OEM's forecasts. Part of the oversupply was [a result of] the inability to manage inventory."
He says that a pilot programme started 18 months ago is letting the company predict demand more precisely: "We are embedding ourselves into the OEMs from the original design, and following that through from the bill of materials to the supply chain. The OEMs sign contracts to provide the forecasts we need."
Fairchild and Toshiba, among others, have focused on contracts with major suppliers to get better demand forecasts.
"We are tightening up our terms and conditions and requiring forecasts to help manage the process," said Hudson.
Boersig said: "Customers have to be more sure in what they commit to us."