Korea's Hanwha Aerospace and Krafton to co-develop physical AI, plan joint venture
Hanwha Aerospace and Krafton, the developer behind PUBG: Battlegrounds, announced on the 13th a memorandum of understanding to jointly develop “physical AI” and explore the formation of a joint venture to commercialize the results. The collaboration covers core AI research and development, with plans to pursue demonstration projects, application scenarios, and the creation of an integrated technology and operations framework.
The partners say the alliance will proceed in phases, ultimately linking successful outcomes to a joint venture that would commercialize the technology and establish a long-term cooperative framework. The arrangement leverages Hanwha Aerospace’s defense manufacturing and unmanned systems capabilities alongside Krafton’s AI research and software development strength.
Krafton’s expertise in data management from the gaming industry and its simulation technologies based on virtual environments are highlighted as key contributions to the learning and validation processes for physical AI. The combination of real-world operational experience from Hanwha and Krafton’s virtual training environments could help accelerate the maturation of embodied AI systems.
In addition to defense and manufacturing applications, the partners have signaled an intention to broaden collaboration into space and aviation fields over the long term, indicating a diversification of the AI portfolio beyond terrestrial security and defense markets.
The two companies are also investing through a fund established by Hanwha Asset Management, focusing on AI, robotics, and the defense industry. The fund targets up to $1 billion and aims to back partners across the value chain and link investments to joint development and commercialization efforts.
Krafton CEO Kim Chang-han said the companies plan to establish a joint venture and commercialize their joint development成果, positioning the venture as a global defense technology company. Hanwha Aerospace CEO Son Jae-il stressed that the collaboration with Krafton will introduce a new technology paradigm for physical AI and future defense applications.
For U.S. readers, the deal signals increased cross-border collaboration at the intersection of gaming, artificial intelligence, and defense technology. It suggests potential pathways for U.S. involvement through joint development, supply chains, and investment in AI-driven robotics and simulation platforms, as Korean firms seek to translate entertainment industry data and virtual training into real-world defense and aerospace capabilities. The announced long-term expansion into space and aviation could also intersect with U.S. aerospace and national security interests, underscoring the global stakes in next-generation AI-enabled systems.