Apple made this decision well over a year ago. Perhaps the fundamental goal of iPhone X was to get as close as they could to an edge-to-edge display. No chin whatsoever. There were, of course, early attempts to embed a Touch ID sensor under the display as a Plan B. But Apple became convinced that Face ID was the way to go over a year ago. I heard this yesterday from multiple people at Apple, including engineers who’ve been working on the iPhone X project for a very long time. They stopped pursuing Touch ID under the display not because they couldn’t do it, but because they decided they didn’t need it. I do believe it’s true that they never got Touch ID working, but that’s because they abandoned it in favor of Face ID early.
I don’t know why recent supply chain rumors suggest Apple was scrambling to get Touch ID working on iPhone X as late as this summer, and no one at Apple seems to know either. Disinformation campaign from competitors?