Apple is working on a radical upgrade to the chip design in Apple Watch Series 7, according to DigiTimes (63.5% accurate, via MacRumors.)
Taiwanese supplier ASE Technology has developed double-sided System in Package (SiP) technology that allows for a smaller chip design
Apple Watch Series 7 is rumoured to be redesigned (with flat edge) and include new health features that would be taken advantage of with the new chip
What would this mean for the watch?
The double sided chip would allow you to have connectors on both sides of the chip, making the space that is required for the chip smaller; allowing space for a bigger battery or another component or overall making the watch thinner.
The most likely use of the extra space would be so that Apple could add a larger battery in a watch that is tremendously size constrained already.