In his 1988 [_Report on the 65c832_][1], Mensch described the 65c832 as a back-burner project with an uncertain timeline: 

> Since WDC is not a gigantic conglomerate, it has limited 
resources.  If all your manpower, time, and money are going towards the 
development of the 65c265, you don't have any left for the '832.  That's 
exactly what was happening with the 65c832 as of June, 1988.  It's a 
concept that WDC employees kick around all the time, but on which active 
work has yet to begin.  On the positive side,  there's still time to 
influence WDC's design.  On the down side, it will be a couple of years, 
at least,  before the 65c832 is real.

A 51 page [preliminary datasheet][2] was then produced in 1990 and [updated in 1991][3], but as far as anyone knows, no silicon ever came of it. As to why, one can only speculate (and a quick google will get you plenty such speculation -- either how great a chip it would have been, or what a failure).

Personally, I think it was the relative failure of the 65816-based Apple IIgs that convinced Mensch to shelve the project. Its key selling point had been that it was both a shiny, new  16 bit machine, and fully compatible with the Apple II line at the same time. But this didn't translate into sales in the way Mensch and Apple had hoped (Apple doing its share here by hobbling the IIgs and promoting the Macintosh). By the early 90s, the 32bit market had largely been divided by Intel and Motorola, and it was becoming clear that a 6502-compatible 32 bit processor would not be able to gain a significant market share. 


  [1]: https://mirrors.apple2.org.za/apple2.caltech.edu/miscinfo/65xxx.chronology
  [2]: https://downloads.reactivemicro.com/Electronics/CPU/W65C832%20CPU%20Datasheet%20v2.0.pdf
  [3]: http://archive.6502.org/datasheets/wdc_w65c832_preliminary_mar_1991.pdf