Krafton and Hanwha form joint venture to advance physical AI for defense
Krafton, the South Korean game developer behind PUBG, has formed a strategic alliance with Hanwha Aerospace to pursue joint development and commercialization in the field of physical AI, including applications for defense. The two companies signed a memorandum of understanding to cooperate on core technology, demonstrations, and the eventual establishment of a joint venture.
The collaboration aims to combine Krafton’s AI research and software engineering strengths with Hanwha’s industrial and defense manufacturing capabilities. Krafton’s experience in data operations and virtual-environment simulations will support the learning and validation of physical AI systems, with phased plans to test and deploy in real-world environments.
Under the agreement, Krafton and Hanwha will pursue joint research and development on physical AI technologies, explore verification and application scenarios, and build a joint operating framework. A joint venture is also planned to speed up the translation of development results into commercialization and to deepen long-term cooperation.
In addition, Krafton will invest in a fund managed by Hanwha Asset Management. The fund targets investments in AI, robotics, and defense, aiming to raise about $1 billion. The fund is intended to expand the physical AI ecosystem, strengthen tech competitiveness, and identify partners for co-development and commercialization.
Kim Chang-han, Krafton’s chief executive, said the collaboration would fuse Krafton’s AI and software capabilities with Hanwha’s on-site industrial know-how to accelerate real-world deployment, and that the planned JV would grow into a global defense technology company akin to Anduril.
Son Jae-il, head of Hanwha Aerospace, emphasized that AI is moving from industry into defense through physical AI, and that the Krafton collaboration could set a new technology paradigm for future defense applications.
Krafton has signaled long-term growth in physical AI, establishing a robotics-focused entity in the United States last year through Rudy Robotics and launching a Korea-based subsidiary this February led by Krafton’s Chief AI Officer, Lee Kang-wook. The new alliance with Hanwha will pair robotics R&D with field demonstrations and commercialization via the JV.
For U.S. readers, the deal illustrates growing cross-border collaboration in AI, robotics, and defense technology. It highlights how Asian tech and gaming firms are moving into defense-adjacent innovation, potentially shaping supply chains, investment flows, and global competition in frontier technologies. The involvement of a major asset manager’s fund underscores a broader capital push toward scalable, next-generation AI and robotics initiatives with defense relevance.