Krafton to invest $1 billion into South Korean defense company partnered with the U.S. navy
Subnautica and PUBG maker Krafton has agreed to sink around $1 billion into Hanwha Aerospace's global AI, robotics, and defense initiatives.
The company has penned a Memorandum of Understanding (MoU) with the South Korean multinational as part of a broader effort to invest in physical AI.
As noted in an announcement on the Krafton website, the strategic alliance will see the two companies work in tandem to "develop and commercialize technology across various sectors, including defense."
It will also result in Krafton investing into funds established by Hanwha Asset Management "centered on AI, robotics, and defense," with a target size of $1 billion.
Hanwha finances and develops a number of defense systems across land, air, sea, cyber, and space—including the K9 self-propelled howitzer, which it notes includes "precision-guided munitions and multiple rocket launchers."
In 2024, Hanwha became the first in Korea to secure and carry out maintenance, repair, and overhaul (MRO) projects for the U.S. Navy after agreeing to service logistics support vessels including the USNS Wally Schirra.
Krafton said it will leverage its experience in "operating large-scale game data and physics-based virtual worlds serve" as core assets when training and verifying physical AI software, and explained it also intends to launch a joint venture with Hanwha to "seamlessly advance joint development outcomes from implementation to commercialization."
Notably, the South Korean publisher claimed that Hanwha has the potential to establish itself as a leading global defense technology company, before comparing it to Anduril—the U.S. military contractor established by Oculus founder Palmer Luckey.
Hanwha Aerospace President and CEO Jae-il Son said the company's partnership with Krafton will deliver a "new paradigm standard in areas of physical AI and future defense."
Krafton announced its partnership with Hanwha on March 13, just days before losing its high-profile legal dispute with the co-founders of Subnautica developer Unknown Worlds.
