By your logic, anything makes sense for mass production if a few people are interested in it. Because that's all this is. People fascinated by the idea of a screen that folds. The masses aren't asking for this or finding that they need it.
Foldables are a fad, nothing more. They don't serve any real practical purpose sought after by the majority of consumers, and the trade offs for being able to have a much larger screen in your pocket for that small subset of people isn't worth it.
They're a solution in search of a problem, and they aren't ever going to be a thing unless technology advances to the point of them being as thin as phones are now. Even then, I really doubt most people would care.
I'll give you a somewhat relevant, but opposite comparison. When the Apple Watch came out, people in this forum would routinely complain about how clunky it is to carry around a phone, and they couldn't wait to stop relying on it and instead move everything to their wrist. This was absurd of course, but people ran with it anyway. "Phones were going away, you'll see!!!!" Of course that never happened, and while people do like the Apple Watch, it hasn't replaced people's phones at all. Now you're going on about how you need a BIGGER thicker phone... for reasons. It ain't happening.
The size of most phones today (excluding the obnoxious huge ones, which are hilarious to watch people try to use in any sort of easy manner) are perfect for single handed use, in on the go situations, and they easily fit in your pocket without being uncomfortable or creating an obscene looking bulge in your clothes. I work in user experience and usability. I don't think I've ever once heard a person in any session say "I'm finding this app/page hard to use because I just don't have enough real-estate. If only I could be on an iPad instead." Different devices with different sizes make sense for different situations in our lives.
I may be wrong, but I would bet money that while Apple might be exploring the idea of foldables, that they're going to arrive at similar conclusions, and avoid them altogether. Not only for the reasons mentioned above, but also because doing so would cannabalize their own product lineup, and they'd be forced to nearly double the cost of phones just to make up for what they'd lose in iPad sales. All so we can carry bigger thicker phones in our pockets that most people would only be annoyed by.
Having a larger screen that fits into a pocket isn't a fad, and I'll go on record and say IMO some sort of shrinkable screen will be ubiquitous in the next 5 years or so, feel free to come back and prove me wrong. They will be ubiquitous just like "phablets" are today, even in spite of naysayers with lack of vision.
Apple Watch has nothing to do with shrinkable screens, sure some can make them work as full fledged phones, but most consumers choose to still have a phone. But it's an entirely different paradigm and really not comparable to what we are talking about, so I don't really see the point you are making?
The size of most phones today are actually not very usable one handed, unless you have giant hands, and I have pretty large hands. But let me guess, the "obnoxious huge ones" are which ones? The iPhone 13 pro max? Or just the vanilla iPhone 6" screen? It seems like now you are against "obnoxious huge" phones as well, lol, guess what that ship has passed and left you on the dock waving buh bye. Interestingly enough having a 6.3" screen Samsung Mega 8 or 9 years ago would have caused many stares and head turns, most likely how shrinking screens today do but won't in a year or 2. But no one bats an eye these days at a Pro Max 6.7" display. PS: just my anecdotal experience but my Fold 3 actually fits better into my front pocket than my iPhone 13 pro max because it's narrower, but you don't see me going on a rant about how wide my 13 pro max is. Still, I don't deny that they need to get thinner, no argument there, but to throw out the entire paradigm based on a single model in what is a very early time is just having no forward vision at all.
You never heard anyone say they wish they had a larger screen for an app, webpage, video, etc? I call BS on that one. Again just look back on the history of smartphones and how the screens are getting ever larger and larger year after year. Jeez, it doesn't take a rocket scientist to even look at computer monitors or television screens growing in size. Come on man, it's really really not brain surgery we are talking about here.
Apple might have no choice but to have some sort of shrinkable screen as they become ubiquitous, pretty much how they released a "phablet" because that's what consumers wanted. Sure they will hold out as long as they can, and I completely agree that the reasoning behind the scenes will be because they don't want to cannibalize sales. But eventually they will come to a point where consumers ask why they can't shrink down their tablet screens, or size up their phones.
So take 23, shrinkable screens are one way to solve the problem of wanting a larger screen that can still fit into a front pocket.
Edit: Wait, I think I found the perfect picture which might demonstrate screens getting larger over time, even one dinosaurs can relate to.
But in all seriousness (no seriously this time) here you go:
My favorite subconscious saying: "Larger screen phones are a solution in search of a problem."
Here is a nice summarized one: