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Other than flip/niche phones, phones appear to have plateaued.

IF you offer someone a phone with similar specs to others, yet much, much more private - many would go for that.

If that were true then the Windows phones would've survived. You need the app ecosystem.

How many is many? Fairly sure hardware development is very hard and expensive. Are we talking about 1 million people worldwide (peanuts, will probably not recover the investment) or 50 million worldwide (might be worth it)?

I think you're an order of magnitude out. Motorola shipped 36.6 million handsets total across 2024. They seem to have had 33 handset models available in that period, and they were in profit, so the break-even point is presumably somewhere below 1.1M handsets.

If I'm off for the second group I'm probably also off for the first one. I'd be surprised if a purely privacy focused phone sells more than 200k units per year.

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