Crafting can be accomplished by unlocking specific Talents and then creating Weapon Upgrades and Armor Upgrades for Weapons and Armor at workbenches found in the world. The better your talents, the better Crafting Plans you can use. Additionally unwanted equipment can be recycled. You may also create Items provided you have their required Components and Serum.
Upgrades require Components which can be found while exploring the different Locations and defeating Enemies. To apply an upgrade you need the appropriate Talent for an upgrade as well as the required Components and an eligible Weapon or piece of Armor with an available upgrade slot.