It can, and with the 1.9.0 update it did. See the notice near the bottom regarding the EEPROM: Snapmaker 2.0 Firmware Updates and Downloads - #9 by Alan
Generally though, it will not update unless they change the memory layout in the EEPROM.
Just thought I’d mention for others who aren’t intentionally trying to erase all settings during an upgrade. It’s smart to take a backup of your M503 before a firmware upgrade, just in case.