The first problem is that iterating hardware is expensive, so any methodology that requires many rapid iterations of hardware is going to have a much higher cost floor. If the hardware is high complexity and has a niche application, even *one* board respin may be intolerable (think of some of the teardowns of (what used to be) ridiculously expensive kit with bodge wires all over the place, because it was cheaper to bodge the hundred or so boards they needed than to redesign the PCB). It's really only financially feasible to repeatedly iterate hardware if it's some combination of simple and high volume. But if it's simple, then why would you need so many iterations?
The first-and-a-half problem is that iterating hardware takes time. So you finish a new 'sprint', order hardware, and then what? Twiddle your thumbs for a few days while you wait for boards etc? Have everyone on the team switch to another project, forcing a major mental context-switch that will have to be reversed in a few days? Plow ahead on the next 'sprint' of this project, so that by the time you have this iteration in hand for testing your current design documents no longer reflect it?
The second problem is that it's almost impossible to implement a new hardware feature without affecting many other aspects of the design. You're not talking about writing a handful of new functions and clicking "Compile", you're talking about re-evaluating your power budget, finding or making enough contiguous free space on the board to place new components, hopefully not breaking other functions as you shuffle things around to make room, running new signals, possibly changing connectors to add new signals in/out of the board (which may require changing other PCBs), possibly revising your mechanical design to accommodate new connectors and/or a larger PCB. It's much easier to do all of that in CAD + design review meetings BEFORE you order PCBs or start fabricating enclosures.
I guess you could do something agile-ish in the schematic design stage with strict hierarchical schematic capture, but even then the tools don't necessarily lend themselves to propagating changes through interfaces between sheets in a well-controlled way, as far as I know, so you still need to have a well-defined structure from the beginning before you divvy up the work.
In short, each 'waterfall' in hardware is unavoidably expensive, so any methodology that requires more of them is going to be a tough sell. Even if the waterfalls are smaller from a design point of view, the nature of hardware requires a large minimum amount of effort to implement it, based on the amount of effort required to spin the PCB or enclosure or whatever. As a cost proposition it makes more sense to front-load all of the design so you get as much as possible out of the first prototype, do as much modification/bodging of the prototype as you can to verify any necessary hardware revisions, then do another, hopefully final, design.
Of course if when you said "hardware" you were including firmware/HDL, then okay, sprint away, but that's not really the same thing as hardware.