I'll repeat myself every time the topic comes up: The iPhone SE isn't Apple's phone intended to compete with other midrange phones; that's the $499 iPhone 11, which has exactly what you'd expect from a budget phone: Slower CPU, less storage, not-as-nice screen, older-model camera, no 5G. Yes, it costs more than the competitor's lower-end phones. That's not surprising, it's how Apple rolls.
The SE is an outlier that's clearly not designed like a bottom-end device. It has an incongruently top-of-line CPU (two versions newer than the 11), 5G (unlike the 11), and up to 256GB storage (twice what you can get in the 11) in a 7-year-old form factor with an old-school button. It might be Apple's cheapest phone, but everything about it is designed as a fully modern phone for people who "just want a phone like my old one" or are change-averse for whatever reason and actually want it to look like that.
If the SE was really just supposed to be cheap, then Apple would have put a slightly older CPU in it and/or cut corners on the storage so they could get the price to $399 and not make it way higher-specc'd than the 11 that price-wise sits above it in the model lineup. It's not like someone settling for an incongruently old-style phone to save a few bucks will care that much about processor speed and 5G.
The only reason you'd slap a brand-new CPU, 5G modem, and up to 256GB storage into an anachronistic form factor is to make sure it'll be able to stay in service as long as possible, and because you're expecting people to buy it because of the old-school design, not in spite of it.
Not to say that there aren't some people who will buy one solely because it's $70 cheaper than the 11, but it just makes no sense as a product unless it's designed for people who want it to look like that.
