Krafton and Hanwha to form joint venture for physical AI in defense
Krafton, the gaming company behind PUBG, and Hanwha Aerospace have signed a memorandum of understanding to jointly develop physical artificial intelligence technologies for defense and other sectors, with plans to establish a joint venture to commercialize the results. The collaboration will combine Krafton’s AI research and software capabilities with Hanwha’s defense and manufacturing industrial base.
Under the agreement, the two firms will pursue core physical AI research and development, evaluate demonstration and real-world testing scenarios, and build the technical and operating systems needed to deploy the technology. The plan includes forming a joint venture to accelerate field applications and strengthen long-term cooperation.
Krafton will also invest in a fund managed by Hanwha Asset Management, focused on AI, robotics, and defense. The fund targets a total size of about $1 billion and aims to back promising technologies and companies to broaden the physical AI ecosystem and bolster competitiveness across the value chain.
The companies intend to use the fund to identify high-potential partners across the core value chain, enabling joint development and commercialization of成果. The arrangement envisions a phased approach to scale from research to market-ready products and systems.
Kim Chang-han, Krafton’s CEO, said the collaboration would accelerate the deployment of real-world technologies by marrying Krafton’s AI and software-operating capabilities with Hanwha’s field-based expertise, and that a joint venture would turn development成果 into commercial offerings and potentially grow into a global defense-tech player.
Hanwha Aerospace CEO Son Jae-il noted that AI is expanding from industry into defense as physical AI, and that the Krafton partnership could help set new technology standards in this emerging field.
Krafton has been expanding its physical AI ambitions beyond gaming. It established Ludo Robotics in the United States last year and created a Korea-based subsidiary in February led by Krafton’s Chief AI Officer, Lee Kang-wook, to drive its AI strategy. The two initiatives—Ludo Robotics and the proposed JV with Hanwha—will be positioned as complementary pillars for advancing robotics research and field testing.
For U.S. readers, the deal signals deeper Korean engagement in advanced AI and robotics with potential implications for defense technology, supply chains, and cross-border investment. A successful collaboration could influence U.S. partners and suppliers in dual-use tech, and it underscores growing integration between entertainment-tech companies’ AI capabilities and industrial defense applications. It also highlights how foreign investment vehicles focused on AI and robotics are shaping the funding landscape for next-generation technologies with potential access to U.S. markets and collaboration opportunities.