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Even if the data is encrypted on the physical medium of the drive, the fact that the firmware is controlled by a malicious third-party means that it can be decrypted by that third-party. If data is encrypted by the operating system, and it is sent in a scrambled form to the drive, then it would not matter if the firmware is malicious or not.
For example, it defines a way of encrypting the stored data so that an unauthorized person who gains possession of the device cannot see the data. That is, it is a specification for self-encrypting drives (SED). The specification is published by the Trusted Computing Group Storage Workgroup.
Disk encryption is a technology which protects information by converting it into code that cannot be deciphered easily by unauthorized people or processes. Disk encryption uses disk encryption software or hardware to encrypt every bit of data that goes on a disk or disk volume. It is used to prevent unauthorized access to data storage. [1]
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The encryption method should not waste disk space (i.e., the amount of storage used for encrypted data should not be significantly larger than the size of plaintext). The first property requires defining an adversary from whom the data is being kept confidential. The strongest adversaries studied in the field of disk encryption have these ...
Note that this does not imply that the encrypted disk can be used as the boot disk itself; refer to pre-boot authentication in the features comparison table. Partition: Whether individual disk partitions can be encrypted. File: Whether the encrypted container can be stored in a file (usually implemented as encrypted loop devices).