Connecting to wifi sensors while keeping cellular active

Is there an API that lets me create a wifi hotspot for the sensor to connect to the phone without requiring the user to configure network stuff manually?

No.

Or maybe the sensor can act as a soft AP and the phone can connect to it for a small amount of time to retrieve the latest reading.

Is this actually possible to do without manual user configuration?

No.

What you’re looking for here is some form of peer-to-peer Wi-Fi. Apple platforms support this (subject to caveats) but this only works between Apple platforms. This restriction has been discussed before on DevForums; a good place to start is this post.

The standard workaround is something you’ve already considered: have the accessory create its own access point. This works, but the final user experience is less than ideal. This post explains the details.

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Quinn “The Eskimo!”
Apple Developer Relations, Developer Technical Support, Core OS/Hardware

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