KRAFTON, Hanwha form defense AI alliance with JV and $1B investment fund
KRAFTON, the South Korean game developer behind PUBG, and Hanwha Aerospace have signed a memorandum of understanding to form a strategic alliance focused on physical artificial intelligence, spanning research, development, and commercialization in areas including defense.
Under the MOU, the two companies will jointly research and develop core physical AI technologies, review demonstration and application scenarios, and build the technology and operating frameworks needed to deploy the innovations. They also plan to establish a joint venture to accelerate field deployment and commercialization of the joint efforts, with a view to strengthening long-term collaboration.
KRAFTON will also participate in a fund established by Hanwha Asset Management. The fund targets investment in AI, robotics, and defense-related sectors and aims to reach a scale of about $1 billion.
The two partners say the JV and the fund will help identify partners across the value chain with strong growth potential, and connect development and commercialization through coordinated programs. The arrangement envisions a sustained ecosystem for collaboration beyond the initial projects.
KRAFTON chief executive Kim Chang-han said the collaboration would combine the game maker’s AI technology and software operations with Hanwha’s on-the-ground capabilities to accelerate real-world technology deployment. He added that the JV would be developed to resemble a global defense technology company along the lines of Anduril, the U.S.-based defense tech firm.
Hanwha Aerospace chief executive Sohn Jae-il said AI technology is expanding from industry into defense as “physical AI,” and that cooperation with KRAFTON would help establish a new technological paradigm for future defense applications.
KRAFTON has been expanding its robotics research presence overseas, establishing a U.S.-based robotics research entity, Ludo Robotics, late last year and opening a Korean subsidiary last month. Ludo Robotics is led by KRAFTON’s Kim Chang-han as CEO, with Korea’s head of the unit, the chief AI officer, being Lee Kang-wook.
KRAFTON says Ludo Robotics will anchor robot AI research, while the Hanwha JV will drive demonstrations and commercialization, creating synergistic opportunities across both sides’ strategic initiatives. The agreement signals a broader push by a Korean tech group into defense-oriented AI and cross-border collaboration, with potential implications for U.S. supply chains, technology policy, and defense-tech investment dynamics.