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Since the deployment of the ARPANET in the 60s and the local area networks, Intranets, and the Internet in the 70s and 80s, research investigation and commercial product developments have focused on network infrastructures such as fiber trunks, routers, and switches, as well as OSI layers 2 and 3 protocol equipment. Recently, in response to the increasing complexity of the communication protocols and exploding demand for functionalities in network active components, chip manufacturers and researchers recently shifted their effort to the design and implementation of NPUs (network processing units). This work investigates the characteristics and properties of network applications and protocols. Understanding the requirements of these applications and protocols enables the formulation of the overall objectives and specifications in the design of NPUs. Some of the existing commercial products are surveyed and their functional objectives and design approaches are examined. We conclude with the current status of NPU development. Immediate challenges in design and implementation of NPUs, with respect to the rapid network expansion and increasing traffic demand, are also discussed.