Why SmartNICs Are Redefining Data Center Performance: 2023 China Industry Report

1. Definition of SmartNIC

Smart network cards (SmartNICs) flexibly offload tasks that are unsuitable for CPUs, meeting data‑plane processing needs while remaining compatible with existing network protocol ecosystems. Their core purpose is to reduce CPU load so that processors can focus on higher‑value workloads. Traditional NICs only handle link transmission, network‑stack algorithms, and protocols, leaving functions such as storage, encryption, and security to consume significant CPU resources.

2. Industry Classification

From a processor‑design perspective, SmartNICs fall into four main architectures: SoC‑based, FPGA‑based, NP (Network Processor)‑based, and ASIC‑based chips. Single‑architecture solutions often cannot satisfy diverse, complex scenarios. SoC designs offer programming flexibility and rich features but face performance and power‑consumption limits. FPGA, NP, and ASIC designs deliver stronger performance at the cost of reduced programmability. Consequently, most modern SmartNICs adopt hybrid forms such as SoC+FPGA, SoC+NP, or SoC+ASIC to balance flexibility and speed.

3. Industry Characteristics

The SmartNIC market has expanded rapidly since the first SmartNICs appeared in 2013, evolving to second‑generation DPUs and now moving toward third‑generation IPUs. In China, a wave of startups—such as Yunbao Smart, Xinqiyuan, and Yunmai Xinlian—have emerged, leveraging FPGA, NP, and ASIC architectures to design DPUs. These companies collaborate with domestic cloud providers and data‑center operators through custom or joint‑development projects, accelerating real‑world deployments.

4. Development History

Initial exploration of SmartNICs was driven by overseas cloud service providers, which demonstrated significant performance gains in data‑center environments. Chinese internet giants such as Alibaba and Tencent have since invested heavily in SmartNIC development, reducing hardware costs and operational power consumption while enhancing the competitiveness of their cloud offerings. Modern DPUs have evolved from partially offloading workloads on host CPUs (first‑generation SmartNICs) to fully programmable, embedded‑CPU solutions that can offload the entire network stack.

5. Industry Chain Analysis

The upstream chain comprises EDA tool development, IP‑core licensing, and packaging/testing. Downstream, SmartNICs serve data‑center, cloud‑service, and telecom operators that demand high‑performance computing, storage, and secure data processing. As compute‑intensive applications proliferate, reliable high‑bandwidth networking becomes a prerequisite for delivering differentiated services and ensuring data‑center security.

6. Market Size

Data‑center infrastructure is a cornerstone of the cloud era, and the growing demand for network bandwidth outpaces CPU performance improvements, especially as Moore’s Law slows. In 2020, DPUs began gaining traction in China, and by 2021 the market exploded to 7.53 billion CNY. Driven by data‑center upgrades, edge‑computing growth, and digital transformation, the market is projected to reach 69.2 billion CNY by 2026.

7. Competitive Landscape

The report identifies seven core data‑processor vendors—Xingyun Zhili, Dayu Zhixin, Yunbao Smart, Zhongke Yushu, Xinqiyuan, Yunmai Xinlian, and Yisi Xin. All secured financing in 2021, indicating strong investor confidence. Although the Chinese SmartNIC sector started later than abroad and most firms remain private, competition is currently evaluated on financing stage, product portfolio, and technical architecture. Companies such as Yunbao Smart, Xinqiyuan, and Zhongke Yushu currently hold a lead, and firms that can provide integrated, customized SmartNIC solutions are expected to win market share.