Krafton has entered into a strategic partnership with Hanwha Aerospace to accelerate the development and commercialization of Physical Artificial Intelligence (Physical AI), with applications expected across defense, robotics and industrial systems. The two companies have signed a Memorandum of Understanding outlining plans to jointly develop technologies that enable AI systems to interact with and operate in real-world environments. The collaboration also includes discussions around forming a joint venture that would help translate research outcomes into deployable solutions and commercial products.
The partnership combines Krafton’s expertise in artificial intelligence research, data management and simulation software with Hanwha Aerospace’s manufacturing capabilities and infrastructure within the defense and industrial sectors. By integrating these complementary strengths, the companies aim to develop technologies capable of operating reliably in complex real-world environments.
Physical AI refers to artificial intelligence that controls or interacts with physical systems such as robotics, autonomous machines and advanced defense equipment. Unlike purely digital AI models, Physical AI systems must be trained to function within unpredictable physical environments where real-time decision-making and high levels of reliability are essential.
Krafton’s experience in managing large-scale data environments and building sophisticated simulation platforms will play a key role in this effort. The company’s virtual environment technologies allow developers to model real-world scenarios and test algorithms in simulated conditions before deploying them in physical settings. This capability is expected to support faster training cycles and more rigorous validation of Physical AI systems.
Under the agreement, the companies will carry out joint research initiatives focused on core Physical AI technologies. These efforts will include evaluating potential use cases, conducting demonstration projects and developing operational frameworks needed for field deployment.
In addition to technology development, the partners intend to explore the creation of a joint venture designed to accelerate commercialization. The proposed venture would serve as a platform for bringing jointly developed technologies to market while supporting long-term collaboration between the two companies.
Krafton will also participate as an investor in a new investment fund managed by Hanwha Asset Management. The fund, which is targeting capital commitments of approximately $1 billion, will focus on emerging sectors including artificial intelligence, robotics and defense technologies.
Through participation in the fund, Krafton plans to support startups and technology developers working across the Physical AI ecosystem. The initiative is expected to identify promising companies and technologies across the value chain and connect them with opportunities for joint development and commercialization.
Kim Chang-han, Chief Executive Officer of Krafton, said the collaboration will help accelerate the development of AI systems designed to function in real operational environments. By combining Krafton’s software expertise with Hanwha’s industrial and defense capabilities, the partnership aims to advance technologies that can support next-generation defense and robotics applications.
Son Jae-il, Chief Executive Officer of Hanwha Aerospace, noted that artificial intelligence is rapidly expanding beyond traditional digital applications. He said collaboration between technology and industrial companies will play a crucial role in shaping the future of defense innovation.
Krafton has been expanding its presence in robotics and AI research as part of its long-term technology strategy. The company established Ludo Robotics in the United States last year as a research-focused robotics organization and recently launched a subsidiary in South Korea to strengthen its development efforts in the field.
The Korean unit operates under the leadership of Kang-wook Lee, Krafton’s Chief AI Officer, and is responsible for guiding the company’s broader Physical AI research strategy. Through its robotics research initiatives and the planned collaboration with Hanwha Aerospace, Krafton aims to build a technology ecosystem capable of supporting both experimentation and large-scale commercialization.
