(NC AI) NC AI said Thursday it had been selected as the final contractor for a government-led defense R&D project ordered by South Korea's Agency for Defense Development in a consortium with Hyundai Rotem.The project aims to develop a physical AI-based integrated simulator and modular robotic system designed to improve the operational efficiency of future manned-unmanned combat systems.Under the project, NC AI will lead development of a “world model,” a core technology regarded as essential for next-generation robot foundation models. The company said world models enable robots to simulate real-world physics and environmental changes and convert them into training data.NC AI said the technology was a key solution to the “sim-to-real gap,” which results in robots trained in virtual simulations failing to operate properly in real-world environments.The company said its selection reflects recognition of its in-house capabilities in physical AI and world model technologies, fields currently dominated by global tech companies such as Google DeepMind and Nvidia.NC AI said it plans to combine its expertise in building large-scale, high-precision 3D virtual environments with its proprietary 3D generative AI technologies. The company also aims to establish a pipeline capable of supplying large volumes of synthetic data for robot training in complex defense environments.Lee Yeon-soo, CEO of NC AI, said the company’s lightweight world model technology would help bridge virtual and real environments while accelerating AI transformation in Korea’s defense sector.“We will develop a world-class physical AI simulator that seamlessly connects virtual and real environments and take the lead in accelerating defense AI transformation in Korea,” Lee said.