A one-way function can make recovering a secret computationally infeasible, but it doesn't eliminate the implications of allowing the device to decrypt its own data.
I presume you’re referring to a workflow where a password is put into the device, fed through a one way function to derive the key, then the key is used. So the key is derived and never stored on disk.
Nonetheless, your key was in memory. There’s an attack surface for any forensic team. There’s also the capability of trying to brute force the password in a virtual environment after having cloned the device. FBI did this to an iPhone that had full reset after 10 failed attempts.
There’s also the capability to compromise the OS, leave the device there, wait for an admin to come by and supply the password themselves.
I don’t really see how the manner by which you derive your key affects the fact that having the key on device is a vulnerability. It may mitigate the vulnerability but you’re talking about corporations and government entities with practically unlimited budgeting. If the vulnerability exists, it will be explored.
I still think my points stands. It would be stupid for someone committing espionage to allow the same device to also decrypt the data.