Device: MacBook Pro 14-inch, 2021
OS: Ventura 13.4
I want to share my journey on the Magic Keyboard with Touch ID here.
I bought the Magic Keyboard with Touch ID (#1) a year ago, and it had been flawless. The Touch ID unlocks the lock screen and does everything the built-in MBP touch ID does.
The keyboard (#1) couldn't power up a month ago, so I got a replacement (#2) from Apple Store. This #2 keyboard's Touch ID has problems like what users said on this thread; Touch ID works intermittently, Touch ID doesn't recognize and couldn't unlock the lock screen after waking MBP from sleep.
I thought it was a software problem, like multiple Bluetooth keyboard profiles corruption, etc., and I did remove the old keyboard profile from Bluetooth setting along with all Touch ID fingerprint profiles, rebooted, and reconnected with this #2 keyboard. The Touch ID still wouldn't unlock the lock screen after waking up from sleep. I had to do one of the following to revive Touch ID again: a/ power cycle the keyboard, b/turn Bluetooth on and off on MBA c/ power cycle MBA. The Touch ID would work until the MBA slept and woke again.
This is super annoying, so I went to Apple Store to ask for a replacement again. This replacement (#3) has worked flawlessly for 24 hours, like the first one I got. All three keyboards are running firmware 1.4.8, so I don't think it is a firmware problem. I suspect some large batch of the Magic Keyboard with Touch ID has intermittent Touch ID malfunctioning.
It's been only 24 hours, so I will post here if the #3 keyboard still works.
If your Magic Keyboard is still within one year of Apple Care, please go to Apple Store and get a replacement.