Because no one buys Nintendo hardware for the fancy graphics (which has been true since the Nintendo 64 days) and at this point Nintendo would rather not lose money even trying (they have admitted as much before).
I can’t say that I agree. Nintendo have looked for other ways to make their hardware products interesting but they have paid attention to performance, why else go for an Nvidia Tegra rather than something more standard such as a Qualcomm SoC. All these aspects of a hardware device are important, and contribute to making an impact in the market. Something like this might be an opportunity.
But i do wonder if the ray tracing has enough oomph to fill a smartphone screen. The iPhone 13 is 2532 x 1170 pixels, which is a pretty sizeable screen area. The latest iPad Air is 2360 x 1640 pixels. It might be necessary to use an upsampling solution.