It was always kind of assumed that they could, by eg signing a malicious OS update without PIN code retry limits, so the FBI could brute force it at their leisure, or something similar.
They successfully argued in court that being forced to insert code the government wanted would be equivalent to compelled speech, in violation of the first amendment.
As the Feds often do, they dropped the case instead of allowing it to set a precedent they didn't want.
This isn't true, they never "successfully argued in court". There was never any judgement, and no precedent. They resisted a court order briefly before the FBI withdrew the request after finding another way into the device.
Since there is longstanding legal precedent that corporations are people and code is speech, forcing a corporation to insert code that the US government demands is a violation of the first amendment.