South Korea's Krafton, Hanwha Aerospace Form Physical AI Defense Partnership

Krafton and Hanwha Aerospace announced a strategic alliance focused on Physical AI, signing a memorandum of understanding to jointly develop technology and pursue a joint venture to accelerate commercialization in defense and other sectors. The agreement was disclosed on the 13th, with both sides outlining a stepped collaboration.

The partnership combines Krafton’s artificial intelligence research and software development strengths with Hanwha’s industrial infrastructure in defense and manufacturing. The goal is to advance core Physical AI technology and validate it in real-world settings through staged demonstrations and field trials.

Under the framework, the two companies will pursue joint research and development of Physical AI, review proof-of-concept and deployment scenarios, and build the technical and operational systems needed to scale. They also plan to establish a joint venture to translate research outcomes into on-the-ground applications and broader commercialization, strengthening long-term cooperation.

Krafton will also invest in a fund set up by Hanwha Asset Management that targets AI, robotics, and defense sectors. The fund aims to raise about 1 billion U.S. dollars and is intended to expand the Physical AI ecosystem, identify high-potential partners across the value chain, and link joint development to commercialization.

Krafton chief executive Kim Chang-han expressed a commitment to accelerates the practical, real-world use of the company’s AI and software capabilities by pairing them with Hanwha’s on-the-ground expertise, with plans to establish a joint venture that could grow into a global defense technology company on par with Anduril.

Hanwha Aerospace chief executive Sohn Jae-il said AI-driven technologies are rapidly expanding from civilian to defense applications under the rubric of Physical AI, and that the Krafton collaboration could set new standards for future defense technology.

Krafton has been building its Physical AI strategy around its core AI capabilities and game-industry strengths. The company established Ludo Robotics in the United States last year and, in February of this year, set up a Korea-based subsidiary, led by Krafton chief AI officer Lee Kang-wook. The plan is to leverage Ludo’s robotics research alongside the new joint-venture-driven demonstrations to broaden the technology’s practical reach.