Krafton, Hanwha Plan Up to $1B Fund and JV for Physical AI, Defense
Krafton, the South Korean game maker behind PUBG, and Hanwha Aerospace announced on the 13th that they have signed a memorandum of understanding to pursue strategic collaboration in the field of physical AI and to establish a joint venture.
The alliance will combine Krafton’s AI research capabilities and software development know-how with Hanwha Group’s defense and manufacturing infrastructure. The two companies said they will pursue core technology research and development, evaluation of proofs of concept and deployment scenarios, and the creation of a technical and operational framework, with the aim of moving quickly from joint development to field deployment and commercialization through a dedicated joint venture.
A key element of the plan is a joint investment fund led by Hanwha Asset Management. The fund targets investments in AI, robotics, and defense sectors to grow the physical AI ecosystem and strengthen technology competitiveness. The parties said they intend to identify partners across the value chain for joint development and commercialization, using the fund to support broader ecosystem growth. The proposed fund size is up to $1 billion.
Krafton will bring data operation expertise and virtual-environment simulation technologies developed in the gaming industry to train and validate physical AI systems. Hanwha Aerospace will contribute its real-world defense operations experience to improve the readiness and applicability of physical AI technologies in actual environments, with phased proof points to test field viability.
Kim Chang-han, Krafton’s chief executive, said the collaboration would accelerate the development of AI technologies that operate in real-world settings by integrating Krafton’s software operations with Hanwha’s on-site capabilities, and he voiced a goal of forming a joint venture that could grow into a global defense technology company on the scale of Anduril. Son Jae-il, Hanwha Aerospace’s chief executive, stated that the partnership would help establish new technology paradigms in physical AI and the future defense sector.
The move signals how South Korean firms are packaging AI, robotics, and defense know-how to field dual-use technologies. For U.S. readers, the arrangement matters because it highlights potential shifts in regional defense tech collaboration, supply-chain resilience, and cross-border investment in high-end AI and autonomous systems that could influence American suppliers, partners, and policy considerations around export controls and technology transfer. It also underscores broader industry trends in AI-driven automation and simulation-based training that could affect global markets and defense markets.