Yeah, nation state level attacks will still work, especially if they have the phone. But with Android it's not nation state level. It's corporate level and maybe less if they have the phone.
I know of another similar implementation that's used by Microsemi for their FPGA-based secure boot process[1]. They claim to protect the initial AES key transmission using an "obfuscated" crypto library that is sent to the processor over SPI on boot[2]. Also, I wonder if Apple exchanges a nonce during the setup to prevent replay attacks?
[1]: https://www.microsemi.com/products/fpga-soc/security/secure-...
[2]: It's a C/C++ library called WhiteboxCRYPTO. There is a whitepaper (http://soc.microsemi.com/interact/default.aspx?p=E464), but AFAIK the gist of their argument is that the code and keys are sufficiently obfuscated to prevent reverse engineering (typical marketing-speak).
I still downvoted izacus because it was an uncharitable fanboy rambling. The charitable interpretation would be that the walled garden (in regards to the enclave) is a side effect of their implementation, and not the intention.