South Korea's Hanwha, Krafton to explore joint venture on physical AI for defense

Hanwha Aerospace and Krafton have signed a non-binding memorandum of understanding to jointly develop “physical AI” technology for defense, with the goal of establishing a joint venture that would integrate AI capable of autonomous judgment into real-world hardware such as robots, drones and other defense platforms. The plan also envisions expanding collaboration into space-related applications over the long term.

Physical AI refers to AI embedded in physical systems that can sense, decide and act in real environments. The companies say the partnership will combine Krafton’s AI and virtual-simulation expertise with Hanwha’s real-world defense and aerospace hardware to accelerate research, field testing and commercialization of advanced systems.

A central pillar of Krafton’s contribution is its AI-based simulation technology. Krafton has been developing virtual environments and cooperative non-player characters designed to work with humans. The collaboration aims to leverage these virtual-simulation capabilities as a training and testing ground for AI-enabled weapons systems and other defense technologies, reducing the need for costly live-fire or in-field experiments.

Krafton also plans to invest in Hanwha Asset Management’s global fund, which targets about $1 billion and focuses on AI, robotics and defense-related technologies. Krafton is a major investor in that fund, expanding its financial role alongside its technical collaboration.

Krafton has been expanding its operations in robotics and autonomous systems. It operates Ludo Robotics, a subsidiary established in the United States, and appointed Krafton’s chief executive as Ludo Robotics’ CEO to drive the unit’s growth. The collaboration with Hanwha is expected to channel advances from Ludo Robotics into the joint venture’s research and development.

Hanwha Aerospace has been pursuing AI-driven improvements to defense platforms, including autonomous vehicles, object recognition and combat-control technologies. The company has outlined a roadmap to build an independent defense AI platform by 2030 and has highlighted the broader aim of creating a sovereign AI ecosystem for defense, a goal it publicly reinforced at the ADEX 2025 defense expo with two other Hanwha defense units.

For U.S. readers, the alliance signals how South Korea is stitching together gaming, AI simulation and real-world defense hardware to advance next-generation weapons and autonomous systems. The partnership could influence regional defense innovation, potential supply-chain considerations, and opportunities for collaboration or competition with American firms in AI-enabled weapons, unmanned systems and related services. It also underscores ongoing interest by global investors in funding AI, robotics and defense technology through cross-border partnerships.