Krafton, Hanwha Aerospace form JV, back $1B AI, robotics, defense fund

Krafton, the South Korean game developer behind PUBG, and Hanwha Aerospace announced on the 13th that they have signed a memorandum of understanding to jointly develop physical AI technology and set up a joint venture. The agreement targets strategic collaboration across defense-related and civilian applications, with a focus on turning research into market-ready products.

Under the MOU, the two companies plan to conduct joint research and development on core physical AI technologies, explore validation scenarios, and establish technical and operational governance. They also intend to form a joint venture to accelerate field deployment of outcomes and link development to commercialization, while strengthening a long-term cooperation framework.

The arrangement also includes investment channels. Krafton will participate as an investor in a fund managed by Hanwha Asset Management. The fund targets investments in artificial intelligence, robotics, and the defense sector, with a planned size of about 1 billion U.S. dollars (the fund is described as an approximately 1.5 trillion-won commitment for its initial phase).

Krafton and Hanwha Aerospace say the joint venture and the fund will help them identify high-potential partners across the value chain and drive joint development toward commercialization, creating a connected ecosystem for growth and technology transfer.

Krafton’s leadership signals ambitious goals for the collaboration. Kim Chang-han, Krafton’s chief executive, said the partnership would combine Krafton’s AI software and operations expertise with Hanwha’s on-site capabilities to accelerate real-world deployment, and that the JV would be developed into a global defense-technology company on a scale comparable to Anduril Industries.

Hanwha Aerospace CEO Son Jae-il described physical AI as an expanding area where AI technology is increasingly applied to defense. He said the collaboration with Krafton would help establish a new technology paradigm in physical AI and the future defense sector.

Krafton has been expanding its robotics and AI footprint recently. It established Ludo Robotics, a robotics R&D entity based in the United States, late last year, and opened a Korean subsidiary of the same group this year. Kim Chang-han serves as Ludo Robotics’ CEO, while the Korea office is led by a chief AI officer, Lee Kang-uk, who heads the Korean operations.

Krafton representatives say the company will pursue synergy between Ludo Robotics’ robotics AI research and the jointly developed field tests and commercialization activities enabled by the JV and fund, aiming to accelerate growth across both organizations. The moves reflect Korea’s push to advance AI, robotics, and defense tech through cross-border collaboration with U.S. and global partners, potentially affecting supply chains, investment flows, and tech competition in the wider Asia-Pacific and defense markets.