Historically Apple hasn't really had a problem with cannibalizing their own sales - the $329 iPad, Apple Watch SE and this phone right here probably cannibalize sales of the more expensive SKUs, but they exist regardless.

I suspect the real reason they haven't released a foldable yet is that foldables still need to have a soft plastic screen and a crease/bump in the middle, and Apple's design neuroticism would never permit them to ship such a thing.