The Shanghai information technology sector turned in a mixed performance in the first half, with service sector revenue rising rapidly.

The figures show, however, that the city's overall IT industry is moving along a healthy path, the Shanghai Statistics Bureau said yesterday on its Website.

Revenue from IT services, including software, telecommunications, the Internet and broadcasting, grew 36.6 percent to 42.4 billion yuan (US$5.23 billion) in the first half from a year earlier. The best performers were software and the Internet, according to the bureau.

The value-added output of the IT services industry was 21.34 billion yuan, representing 39.1 percent growth year-on-year. The sector's value-added increment, a key component of an industry's average profit margin, was 50.4 percent compared with only 14 percent for IT manufacturing. An income figure for manufacturing was not available.

"IT manufacturing, including wafer plants and computer-making facilities, often requires a huge amount of investment, but it produces limited profits and taxes for the city," said Liu Bing, an analyst at Southern China Securities Co.

The city's IT manufacturing industry depends heavily on foreign investment, carrying the risk that overseas companies might decide to take their capital elsewhere, the National Bureau of Statics of China said in a recent report.

Software and computer service firms contributed more than half the city's total IT service revenue while telecommunications firms grew more slowly during the period, the local bureau said.

Software and computer service companies posted combined revenues of 22 billion yuan, up 55 percent year-on-year.

Among the companies, Shanghai Wicrosoft Co Ltd, a joint venture between Microsoft and a government-controlled firm that provides IT services to domestic clients and outsourcing for overseas customers, said its 2005 revenue is expected to exceed 200 million yuan, up from 180 million last year.

Revenue from Internet service firms rose 48 percent to 3 billion yuan, where about 503,400 families are using broadband access terminals.

(Shanghai Daily August 25, 2005)