I hate to burst your bubble, but the phone the FBI was trying to break into didn't have a secure element. And the approach they used to finally break in was supplied by Cellebrite, not Apple, and only worked because it didn't have a secure element.

Also, this has nothing to do with PRISM, it's just a consequence of a recent Chinese law. Apple has two options. The first is to hand control of the data over to a Chinese company (which is what they're doing). The second is to pull out of China entirely (or at least, completely disable iCloud in China), which would suck for Chinese iPhone users and wouldn't make them any more secure.