SwiftPM will automatically download submodules when fetching a Swift package’s source during the build process
SwiftPackageWithGitSubmodule
This repository has a git submodule and I can confirm that SPM will initialize/update a git submodule if present in a Swift Package.
Note: I had cases that Xcode did not show the folder with the submodule content but content was available in respective checkout result stored in DerivedData folder (example: ~/Library/Developer/Xcode/DerivedData/AppUsingPackage-randomString/SourcePackages/checkouts/SwiftPackageWithGitSubmodule).