Krafton and Hanwha Aerospace Form JV to Deploy Physical AI in Defense

Krafton, the South Korean game developer behind PUBG, and Hanwha Aerospace have signed a memorandum of understanding to jointly develop physical AI technologies and to pursue a joint venture aimed at rapid field deployment and commercialization across defense and other sectors.

The MOU outlines collaborative R&D on core physical AI capabilities, verification of practical use cases, and the creation of a technical and operational framework to guide development. The partners intend to establish a joint venture to translate joint research into real-world applications and to strengthen long-term collaboration.

Krafton will also participate as an investor in a fund being formed by Hanwha Asset Management, which targets investments in artificial intelligence, robotics, and defense technologies. The fund aims to reach about $1 billion in size.

Through the JV and the fund, the companies plan to identify high-potential partners across the value chain and link development directly to commercialization, with the objective of building a global defense tech enterprise at a scale comparable to Anduril Industries.

Krafton CEO Kim Chang-han said the collaboration would fuse Krafton’s AI and software expertise with Hanwha’s on-the-ground capabilities to accelerate technology that works in real environments, with the goal of commercializing joint results and growing the venture toward a global defense tech firm.

Hanwha Aerospace CEO Son Jae-il said AI is rapidly expanding into defense, driven by physical AI, and that the Krafton collaboration could establish new standards for future defense technology.

Krafton has already expanded its presence in robotics research through Ludo Robotics, a U.S.-based robotics research subsidiary established last year, with a Korean subsidiary launched last month. Ludo Robotics is led by Krafton’s CEO, Kim Chang-han, while the Korean unit is headed by CAIO Lee Kang-uk.

The arrangement signals growing cross-border collaboration in AI, robotics, and defense tech and could influence global supply chains and partnerships with U.S. firms as the technologies mature and new funding streams mobilize.