REPLACE(column, CHAR(160), '') unexpectedly clears entire string

[Rolandoc]

We are observing critical and unexpected behavior when using the REPLACE function in Microsoft Fabric Data Warehouse. Specifically, when attempting to remove CHAR(160) (Non-Breaking Space) characters from a string column using REPLACE(YourColumn, CHAR(160), ''), the entire string value is being replaced with an empty string (''), rather than just the occurrences of CHAR(160). This behavior is inconsistent with standard T-SQL REPLACE functionality and is causing severe data corruption in our transformation pipelines.

This is Fabric DWH:

This is other Azure DWH:

[lbendlin]

If you have a Pro license you can open a Pro ticket at https://admin.powerplatform.microsoft.com/newsupportticket/powerbi
Otherwise you can raise an issue at https://community.fabric.microsoft.com/t5/Issues/idb-p/Issues .