Krafton and Hanwha form Physical AI alliance, plan joint defense tech venture
Krafton, the South Korean game and software company, and Hanwha Aerospace have formed a strategic alliance in Physical AI, signing a memorandum of understanding to jointly develop technology and establish a joint venture aimed at commercializing applications across defense and other sectors.
The collaboration combines Krafton’s artificial intelligence research and software expertise with Hanwha’s defense-enabled industrial infrastructure, creating a bridge between advanced AI capabilities and real-world production environments.
Krafton’s data operations and virtual-environment simulation know-how are expected to underpin the learning and verification of Physical AI, helping to raise performance in real-world settings and support phased demonstrations and pilot deployments.
Under the agreement, the two firms will pursue core research and development in Physical AI, verify proof-of-concept scenarios, and build the technical and operational frameworks needed to deploy the technology. They also plan to establish a joint venture to quickly translate development results into field applications and to deepen long-term cooperation.
Krafton will also participate as an investor in a fund managed by Hanwha Asset Management focused on AI, robotics, and defense technologies, with a target size of up to $1 billion. The fund aims to back promising technologies and companies to expand the Physical AI ecosystem and strengthen competitive capabilities, identifying partners for co-development and commercialization.
Kim Chang-han, Krafton’s chief executive, said the alliance would accelerate technology development by integrating Krafton’s AI and software operations with Hanwha’s on-the-ground capabilities, with the goal of forming a joint venture that could commercialize results and grow into a global defense tech company akin to Anduril.
Hanwha Aerospace CEO Son Jae-il noted that AI is rapidly expanding from industry into the defense sector in the form of Physical AI, and that the collaboration with Krafton aims to set new standards for technology and practice in future defense.
Krafton has signaled a sustained push into Physical AI as a long-term strategic area. The company established Ludo Robotics, a robotics research entity, in the United States last year and set up a Korea-based subsidiary in February. Krafton’s Korea office is led by Lee Kang-wook, its Chief AI Officer, who is driving the company’s Physical AI strategy. The plan ties Ludo Robotics’ robotics research to the joint venture’s demonstrations and commercialization efforts to broaden the ecosystem.