Krafton said on March 13 it has formed a strategic alliance with Hanwha Aerospace in "physical artificial intelligence (AI)" and will pursue joint technology development and commercialisation across various areas, including the defence industry.

The companies signed a memorandum of understanding (MOU) on the day for joint development of physical AI technology and the establishment of a joint venture (JV). The partnership will combine Krafton's AI research capabilities and software development technology with the industrial infrastructure Hanwha Group has in the defence and manufacturing sectors.

Under the agreement, the companies will gradually advance tasks such as joint research and development of core physical AI technologies, a review of demonstration and application scenarios, and the building of technology and operating systems. They also plan to set up a JV to quickly link joint development results to field application and commercialisation and to strengthen a mid- to long-term cooperation framework.

Krafton will also participate as an investor in a fund created by Hanwha Asset Management. The fund will focus on investments in AI, robotics and the defence industry, and its target size is 1 billion dollars. It aims to expand the physical AI ecosystem and strengthen technology competitiveness through investment in promising technologies and companies.

Krafton CEO Chang-han Kim (김창한) said, "We will accelerate the development of technologies that operate in real environments by combining Krafton's AI capabilities and software operating expertise with Hanwha's field-based capabilities." He added, "We will establish a JV with Hanwha to link joint development results through to commercialisation and grow the JV into 'a global defence technology company like Anduril.'"

Hanwha Aerospace CEO Jae-il Son (손재일) said, "AI technology is rapidly growing into physical AI used in the defence sector beyond industry." He added, "Through cooperation with Krafton, we will set a standard for a new technology paradigm in physical AI and the future defence sector."

Krafton has been continuously pursuing physical AI research as a mid- to long-term new business area based on its capabilities in fundamental AI technologies and strengths accumulated in the game industry. After establishing a robotics research unit in the United States last year called Rudo Robotics, it set up a South Korea unit in February this year. The South Korea unit is led by Krafton chief AI officer Kang-wook Lee (이강욱), and Krafton is rolling out its physical AI technology strategy centered on the CAIO organisation.