The iPhone 13 Mini made up around 3% of total iPhone sales, so there's clearly a market for compact, mid-range phones ($600-$700). You can manufacture them in China or India for somewhere between $250 and $400, depending on the battery, camera, and overall performance.
The real challenge is that the retail price of a mid-range Android phone can't go over the $500 mark. People in developing countries are always stuck trying to balance quality with price. And for $500 bucks they expect a prime phone nowadays.