I did a side-by-side comparison of a Micro Four Thirds camera (4/3" sensor) and an iPhone SE (1/3" sensor) and the performance was... pretty much the same.
And I'm not talking about some ML interpolation wizardry or automatic face beautification; I was photographing barcodes and testing how many were readable in the resulting images - hardly something Apple would have specially optimised for.
The iPhone has a much smaller sensor, a much smaller lens, costs less, and manages to pack in a bunch of non-camera features. To be competitive in the modern cell phone market your camera has to be straight up magic.