Hey,
Oh yes this problem also caused me to go nuts before!
Even if you enable swap the ESXi busybox space which is used for cli is limited to around 200MB space, which is not enough for running the update.
The solution is simple:
Manually download the update package from https://my.vmware.com/group/vmware/patch#search on your computer then upload it on your server datastore, let's say in /datastore1/update/ESXi670-202011001.zip for example
Then on the SSH cli use these commands:
esxcli software profile update --dry-run -p ESXi-6.7.0-20201103001-standard -d /vmfs/volumes/datastore1/update/ESXi670-202011001.zip
If the dry run is successful, do the update with
esxcli software profile update -p ESXi-6.7.0-20201103001-standard -d /vmfs/volumes/datastore1/update/ESXi670-202011001.zip
Reboot and the update is done