South Korea's Hanwha, Krafton to co-develop physical AI for defense and aerospace
Hanwha Aerospace and Krafton announced an agreement to jointly develop what they call “physical AI” and to explore forming a joint venture to commercialize the results. The two Seoul-based companies said the collaboration will combine Hanwha’s defense manufacturing and unmanned-systems expertise with Krafton’s AI research and software development capabilities.
The memorandum of understanding lays out core plans for co-developing key physical-AI technologies and, in a later step, establishing a joint venture to bring those technologies to market. The aim is to create synergy by leveraging each company’s strengths to advance real-world, AI-enabled systems.
Hanwha Aerospace, a major defense contractor with manufacturing infrastructure, will contribute its experience in weapon-system operation and unmanned technology. Krafton, the game developer behind PUBG: Battlegrounds, will bring data management know-how and simulation-based training techniques that support AI learning and validation in virtual environments.
The partners said they envision expanding their collaboration beyond the initial scope into space and aviation sectors over time, signaling a broader strategic goal beyond consumer gaming and domestic defense applications.
As part of the agreement, both companies will participate in a $1 billion fund focused on AI, robotics, and defense-oriented investments, underscoring a commitment to long-term capital and research in these fields.
Son Jae-il, CEO of Hanwha Aerospace, said the collaboration with Krafton will “pave a new tech paradigm” in physical AI and future defense technology. He did not describe the funding details beyond the fund participation.
Kim Chang-han, Krafton’s CEO, said the companies plan to establish a joint venture to commercialize the jointly developed technologies and to grow the venture into a global defense-tech firm comparable to leading U.S. AI-defense companies.
For U.S. readers, the deal matters because it highlights Korea’s push to integrate artificial intelligence with real-world defense and aerospace applications, backed by strong private investment. If successful, the joint venture could influence international supply chains for advanced AI-enabled defense technologies and shape potential collaborations or competition with American defense-tech players. Krafton’s and Hanwha’s collaboration also illustrates how cross-industry partnerships—gaming data expertise paired with defense engineering—are increasingly driving innovation in AI, robotics, and unmanned systems that could affect global markets and policy considerations.