Saw this written up in one of the trades I read.
You CAN “halftone” with embroidery thread.
Looks like it takes some skill but they teach.
The article itself may be behind a paywall (Graphics Pro Magazine)
https://xdigital.spiweb.com/publication/?m=66205&i=831371&p=54&ver=html5
Here is their website:
If only I liked to embroider. I’ve tried a few little pieces over the years and for some reason it’s never clicked with me. It’s tedious and hard for me to see where I’m sticking that needle lol 
One of our members from long ago used to do gorgeous embroidery. I bet she would like this 
This is the type of embroidery that puts logos on hats and shirts etc.
We’ve been saying this can’t be done for decades, but apparently it can.
Yay, gradients and drop shadows and glows oh my…
BTW, I have no connection with this company.
I don’t design much for embroidered products, but that was pretty interesting to see what they were able to pull off.
Ahh … well that would make sense. My brain was only thinking of hand embroidery 
This pushes a compelling argument for simple logos with simple color palettes one step closer to the rubbish bin.
Hand Embroidery was one of my passions as a younger man. I would produce gradients like that as a background for the Celtic knot work patterns, it’s not hard to do once you get your head around it.
My sister could do it too with hand embroidery, once upon a time.
B, I think once people see what happens when you take this technique to small sizes, the argument for simple logos stays pretty compelling.
Once AI enters the embroidery industry, I think that will open up a realm of possibilities. Progress isn’t always awful. (Except when it is…)