Major game developer and publisher, Krafton, has already been working with NVIDIA on advanced AI in gaming. The announcement in 2025 about the Co-playable Character, a joint venture with NVIDIA to create intelligent AI, could function similarly in-game as a fellow human by looting items, driving vehicles, and being able to do combat like players. As of March 13, 2026, Krafton is deepening its resolve and backing its play with a $1 billion investment in Hanwha Asset Management.
Krafton’s AI Research Meets Hanwha’s Infrastructure
Announced on March 13, 2026, Krafton and Hanwha Aerospace signed a Memorandum of Understanding (MOU) in an effort to develop physical AI technology with combined research from Krafton in AI and software development, with Hanwha Group’s robust infrastructure for defense and manufacturing. These two giants residing in South Korea are looking to the future and AI’s place in the real world.
With Krafton’s experience, largely due to their success with games using established physical laws in video games with large open worlds, it will serve as a training asset for physical AI. Taking AI to the next step, bringing it into robotics and defense technologies, will bring these two leading companies to the forefront of the physical implementation of AI. Their cooperation is expected to expand to space and aviation as their collaboration moves forward.
“AI technology is rapidly growing beyond industries, with new physical AI applications in the defense sector. Our partnership with KRAFTON will offer a new paradigm standard in areas of physical AI and future defense.”
- Jae-il Son, Hanwha Aerospace President and CEO.
Big Brain Meets Muscle
Krafton Pioneering Pathways To Players’ Dreams from Krafton YouTube Channel
Per PC Gamer, Krafton is crafting the brains with their capabilities in training core assets and verifying AI software. Hanwha will be giving the brains of the operation some muscle to back it in the form of space launch systems, air defense hardware, aircraft engines, precision guided munitions, fire control systems, artillery, and armored vehicles.
The venture could lead to some interesting developments as their goal looks to expand on the physical AI capabilities, potentially leading to breakthroughs in how AI is utilized.
According to PC Gamer, though, this all could be taking us down the path of the sensational AI for weapons rabbit hole that will lead to the events portrayed in “Terminator.” Citing an image posted on X made by Chief AI Officer at Krafton, Kangwook Lee, who also happens to be Chief Technology Officer at Ludo Robotics, with the text “How We Reached 74.8% on terminal-bench with Terminus-KIRA.”
Setting High Goals
This isn’t the only thing of note, according to them, as the CEO of Krafton himself, Kim Chang-han, is on record saying he expects their collaboration with Hanwha to become a global defense-style technology company, similar to Anduril. The company, Anduril, founded by Palmer Luckey in 2017, is seen as a pioneer in global defense technology. Instead of taking years to go into prototyping, they manage it within months. They are heavily focused and invested in manufacturing, setting them apart from others in the industry.
He has become known for his robust enthusiasm for AI, going to ChatGPT for a second opinion on whether or not he should listen to advice from his team. They had said his desire to avoid paying a $250 million earnout to head developers Unknown Worlds, the creators of Subnautica 2, could result in litigation. Krafton got crushed by the former heads of Unknown Worlds in a lawsuit they filed due to their termination, something he would have avoided if he had listened to the team’s advice.
Their loss resulted in an extended time frame for the team to pursue the earnout related to the success of Subnautica 2.
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