How come they can make a thin, power sipping high resolution OLED panel for like $100 that fits in a phone but they can't make a reliable switch that ensures privacy?

And the iPhone is coming with an mechanical switch since the first one, even in the waterproofed phones from the newer generations.

I have no horse in this race, but switches are constantly manipulated physically, and can see more abuse and stress because of that.

That's a business case problem. Not enough people are asking for it. It's expensive because it lowers their margin by a notable (maybe not huge) amount. No one said it couldn't be done, just that it's effort for too little payoff.