The block adds a regulatory overhang to SoftBank on a day the shares were already under pressure from Arm and the AI selloff, and uncertainty over whether a fresh application is viable may keep that pressure on. For ABB, the robotics unit stays on its books, with investors likely to focus on whether it revives a separation plan. China’s role as the largest market for the business gives Beijing significant leverage, a reminder of the late-stage risk Chinese reviews pose to cross-border tech deals. Robotics and automation names may see sentiment effects as the physical AI investment case faces a geopolitical hurdle.-Son wanted ABB’s robots for SoftBank’s physical AI future; the robots’ biggest market has said no.Summary:Chinese regulators told SoftBank they will not allow its $5.4 billion acquisition of ABB’s robotics division, the FT reportedSoftBank was informed by China’s National Development and Reform Commission, according to the reportSoftBank is assessing what went wrong and whether it can reapplyChina is the biggest market for ABB’s robotics unitThe deal had won unconditional EU approval in MarchSoftBank shares fell about 5%, also hit by Arm’s slide and the AI selloffChinese regulators have told SoftBank Group they will not allow its $5.4 billion acquisition of ABB’s robotics division, the Financial Times reported on Thursday, citing multiple people familiar with the matter, dealing a setback to Chief Executive Masayoshi Son’s push into what he calls physical AI.According to the report, as relayed by Investing.com, SoftBank was informed of the decision by China’s National Development and Reform Commission, the country’s top economic planning agency. SoftBank is now trying to establish what went wrong and whether it can seek approval again, the FT said. The grounds for the decision were not disclosed.China’s stance carries particular weight because it is the largest market for ABB’s robotics unit.SoftBank agreed in October 2025 to buy 100% of the Swiss engineering group’s robotics business for about $5.375 billion, with completion planned for mid-to-late 2026. The European Commission cleared the deal without conditions in March, while approvals from China and the United States were still pending as of late October.The unit generated about $2.3 billion in revenue in 2024, roughly 7% of ABB’s group total, and employs around 7,000 people. Son had made robotics a major part of SoftBank’s AI strategy, describing physical AI, the combination of artificial intelligence with machines that act in the real world, as the group’s next frontier.The news will compound a difficult session for SoftBank, whose shares fell about 5% in Tokyo morning trade (the exchange is closed for the lunch brak as this news crosses) , lagging a 0.5% decline in the Nikkei 225. The stock was weighed by an overnight slide in Arm Holdings, its prized chip designer, after Arm’s guidance for the current quarter underwhelmed, and by a broader selloff in AI-linked stocks after Democrats won control of both chambers of Congress in the US midterms. SoftBank’s large investment in OpenAI gives it significant exposure to the US data centre buildout that Democrats have signalled they will scrutinise more closely.The next steps will be responses from SoftBank and ABB, and whether a renewed application or remedies can rescue the deal. If not, ABB will need to decide how it handles the robotics business on its own. This article was written by Eamonn Sheridan at investinglive.com.