I think it would make more sense for Nintendo to make a more powerful console on a compatible platform that isn't handheld, kind of like the Sega Master System/Game Gear or Sega Mega Drive/Nomad consoles.

So you can enjoy the same titles on the go as you can on the TV, and you could still use the Switch on the TV, but there would be an alternative for people who want a more high fidelity, fluid experience on a TV or a monitor.

It doesn't even have to be that much more powerful. Even when sticking to the same vendor, a 2018 Nvidia ARM chip had roughly 3-4x the CPU power and 10x the GPU power of the Switch, in a 15-60W power budget. This would be fine for a console that's always plugged into the power mains.

Going to more midrange vendors like Rockchip or Mediatek, or - and this is a long shot - striking a deal with Samsung for using their Exynos chips would probably yield a lower cost device but still net a 4-5x increase in gaming performance.

Emulation has proven that the games are not tied so tightly to their hardware platform for switching to a more modern architecture while maintaining compatibility to be an issue. Even without first-party involvement people have been running Switch games on mobile Android devices with a good processor.