So I've been on this thread since the start and despite thousands of people having this issue, I can't see apple resolving this with a software update.
Kittell's post has been the most accurate, I believe they took their phone in store or spoke to someone with a bit more knowledge. For ease, see Kittell's post below:
'Unfortunately, this is the best explanation I've heard so far.
Face ID gets set up and the data stored in the phone; the hardware quietly breaks but the phone relies on the existing data; iOS updates and requires new data that can't be acquired with broken hardware; sorry Charlie you have to buy a new phone or get an expensive fix on your old phone.
If that's the case, no iOS update will fix Face ID. And Apple Support isn't misleading us when they say that the iOS 14.0 update didn't break Face ID. And I'm just going to deal with a phone with no Face ID for a few years because the rest of the phone works fine (or so it seems, until the next iOS update...)'
It seems it is a hardware issue but the phone continues to work with the existing data stored. The only way I can see that someone can discredit this, is to confirm they used portrait mode successfully right before they updated or had set up an alternative FaceID look just before they updated to the software.
NEW TO THREAD; I would suggest if you are new to the thread and are having this issue; DO NOT RESET FaceID! You will have more luck with getting it to work with future updates if the data is still stored on your phone.
If this is something Apple knows happens, then they should have a warning that triggers prior to updates if the phone detects a fault in the hardware. Either that or they patch into the update that it can continue to use current stored FaceID data.
I want to remain hopeful that a fix will come, but at this point it seems highly unlikely. Which is a shame as I now keep looking at the new Pixel as a potential next buy.