If you want to get into the specifics...neither Apple nor the user holds the real private key.
The key needed to decrypt the phone contents is generated and stored in the Secure Enclave, a separate piece of hardware+firmware on the phone. When the user providers their password/pin, the Secure Enclave checks to make sure it's correct and then it will decrypt the phone contents and make them available but the actual decryption key never leaves the secure enclave and isn't accessible by the main OS.
The key needed to decrypt the phone contents is generated and stored in the Secure Enclave, a separate piece of hardware+firmware on the phone. When the user providers their password/pin, the Secure Enclave checks to make sure it's correct and then it will decrypt the phone contents and make them available but the actual decryption key never leaves the secure enclave and isn't accessible by the main OS.