There isn't anything blocking anybody to implement XOR encryption and embed it in a hardware wallet. As a matter of fact, it has been widely used in military grade applications for more than a century. There is (imperfect) attempt by the Bitcoin harwdare wallet Coldcard producer (SeedXOR) and unfinished one in SeedSigner firmware. I don't know about other instances.

XOR as a solution (technique) is more than 100 years old. It's not something invented by me.