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Normally I use external keyboard with my macbook pro 2018 and never had any problems with toggling iterm2, I use cmd+F12 as a hotkey. But now I'm using laptop keyboard with the touchbar that shows F1-F12 keys by default unless I press fn. And toggling iterm2 no longer works, it seems iterm2 just doesn't recognize F12 key on the touchbar when it's closed, it works fine however when I type in a terminal. I'm on macOS 11.1 and iterm2 3.4.3 (latest as of now).

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Turned out the issue was in Karabiner-Elements, after enabling "Apple internal keyboard" under Devices cmd+F12 started to work fine. After all, the issue wasn't in iterm2 ignoring F12 but in the fact that cmd+F12 combination didn't work.

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