MPLS LER is located at the boundary of MPLS domain as an ingress or an egress router and plays a role in connecting with the existing Internet. Among the components of the MPLS LER, forwarding engine(FE) is a key device which assigns a label to an IP packet by analyzing the destination address of its header in order to enter the MPLS domain, or restructures the cells from MPLS domain into IP packet by reversely processing. In this paper, we investigate the design of FE by analyzing the traffic performance of its components and estimate the IP packet processing capacity of a FE using queueing model and simulation. It is found that the maximum IP packet processing capacity of the Forwarding Engine is about 150,000 packets/sec.