What's the issue with Apple's backdoor? I was reading Apple's public letter here regarding the "backdoor" that they have been asked to create.  I'm very unclear exactly what the issue is.  There was no backdoor in the encryption algorithm that was actually used on the phone and it's doesn't seem as if they are being asked to create one (and sneak it onto phones) for the future.  Instead it seems like they are being asked to remove a feature of their phones which deletes data if too many wrong attempts are made.  A couple of questions:


This seems like it has nothing to do with cryptography or with a government inserting backdoors into encryption algorithms.  Therefore the consequences aren't nearly as universal as they make it sound (in their example of a "universal key").  Is this correct or incorrect?
If the data is encrypted and they just want to be able to brute force the data , why do they need apple to create this piece of software?  Given the resources of the FBI why can't they get the data off the phone and brute force it offline,  or why can't they have their own software engineers (along with some reverse engineers) design whatever it is that apple is supposed to do?
Apple are being asked to put a backdoor, not in the encryption algorithms (which are mathematical constructs that you can't add a backdoor to after you've designed it, and tend to be designed to be free of backdoors), but in their encryption system.

Cryptography isn't just about the basic algorithms but also how you use them. Other big topics in cryptography include protocol design (how basic algorithms are combined to design secure storage and communication systems) and key management (how you generate, distribute, store and revoke keys). The particular aspect that is at stake here is rate limitation, and it is related to key management.

Consider a 4-digit PIN. Suppose that legitimate unlocking of the phone given a PIN must take no longer than 1 second. If you try all PINs (brute force attack), that'll only take a little over 3 hours at most. To make this secure, two things are needed.


The encryption key must be derived not only from the PIN, but also from some other secret component which varies from device to device. Otherwise a resourceful adversary could go through all possible 10000 PINs by trying them on multiple devices.
That secret component must be physically hard to access. You can't just store it in a flash memory. It can't be encrypted. (bootstrapping problem: with what key would you encrypt it?) Recent iPhones and iPads (since the Apple A7 processor) have what Apple calls a “secure enclave” which includes a physically protected processor with some memory for that key. There aren't much details around about the secure enclave; Apple's security guide says what they're willing to say about it.
The secret component must be programmed not to allow an outside entity to try all possible PINs to give out the data encryption key. It's programmed to impose a delay between attempts and lock itself out after too many failed attempts. The same technique is used on other types of devices that must resist physical attacks, such as smartcards (e.g. credit cards with a chip, as is the norm in Europe among other places).


Apple claims, and this is likely, that they cannot give FBI access to a locked phone. This implies that:


Their security architecture follows the idea that I described above, with a secret component in a physically protected memory (that the FBI isn't able to dump). It may not be exactly this, but something with similar properties.
They have not kept a copy of the secret component that's in each phone. (It's probably randomly generated when the device is first booted, and probably regenerated when the device is reset to factory settings.)
They have not programmed the secure enclave with a backdoor, e.g. a secret password that would make it give out either the encryption key or the secret component (from which the encryption key could be calculated for each PIN value).


Apple surely could update their software (the iOS operating system, or more precisely, in fact, I think, the software that runs in the secure enclave) to include a backdoor, e.g. a secret password that would cause the enclave to release the secrets that it stores. Their letter doesn't say so explicitly, but it implies that they could and choose not to. Of course, if such a password existed, there would be no way to limit its use to “legitimate” cases: it would be bound to leak sooner or later, and a secure enclave doesn't know whether it's getting a password from the FBI in a terrorist case, from the FBI in an unauthorized surveillance, or from the FSB, the Ministry of State Security or the Mafia.

The fact that Apple could do it in the future doesn't help for existing devices. If the device can't be started for lack of a PIN, it won't apply the firmware updates.

Note that what I described doesn't rule out the possibility of other attacks. For example, it may be possible to take out the flash memory, put in another flash memory with a different firmware image that contains an update for the secure enclave firmware, and use that to get the secure enclave to relinquish its secret component.

In summary, the answers to your questions are:


What the FBI is asking for would be a backdoor in the encryption system of iDevices. It would be a universal key for iDevices.
Unsoldering a flash chip is well within the FBI's resources. But there are techniques, such as the ones used in smartcards, that allow storing a small amount of data (typically hundreds of kB, I think) and make it much more difficult to extract that data even with relatively fancy equipment.