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Krafton, led by CEO Kim Chang-han, announced on March 13 that it has signed a memorandum of understanding with Hanwha Aerospace to form a strategic alliance in Physical AI. The agreement covers joint technology development and commercialization across sectors including defense and calls for the establishment of a joint venture (JV).
The companies will phase in projects that include joint R&D on core Physical AI technologies, reviews of demonstration and application scenarios, and the development of technical and operational systems. They also plan to form a JV to accelerate field deployment and commercialization of their joint work and to build a mid- to long-term cooperation framework.
The collaboration pairs Krafton’s AI research and software development capabilities with Hanwha Group’s industrial infrastructure in defense and manufacturing. Krafton’s experience in data operations and virtual-environment simulation will be a core resource for refining Physical AI training and validation. Together, the partners plan to raise the maturity of Physical AI systems for real-world operation and conduct staged field demonstrations aimed at practical deployment.
Krafton will invest in a fund organized by Hanwha Asset Management that focuses on AI, robotics, and defense. The fund is targeting $1 billion (about KRW 1.33 trillion). Through investments in promising technologies and companies, the fund aims to expand the Physical AI ecosystem and strengthen technological competitiveness. It will also identify high-potential partners across the value chain and connect them to joint development and commercialization opportunities.
Kim Chang-han, CEO of Krafton, said the companies will accelerate development of technologies that work in real environments by combining Krafton’s AI and software strengths with Hanwha’s field capabilities. He added that the planned JV will commercialize joint development results and that they intend to grow the JV into a global defense-technology company comparable to Anduril.
Son Jae-il, CEO of Hanwha Aerospace, said AI is rapidly evolving into “Physical AI,” extending beyond industry into defense. He said cooperation with Krafton will set a new technological benchmark for Physical AI and the future defense sector.
Meanwhile, Krafton has continued pursuing Physical AI as a mid- to long-term business priority, leveraging its core AI technologies and strengths from the gaming industry. After establishing U.S.-based robotics research firm Ludo Robotics last year, the company formed a Korean subsidiary in February of this year.
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