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In theory, they don't need extra processing in dock.

Switch seems to be pretty thick...notebook thick, with what looks like active cooling. nVidia Shield TV pulls 20W in gaming, it performs (according to GFXBench) some 3-4x worse then GPU similar to PS4's (probably worse in real games) and it's built on 20nm node.

If they managed to cram something inside the Switch that downclocks (or disables some of components, like PS4Pro) while in handheld mode and manages to pull Shield TV level of performance (but on 14nm node), and then runs fully enabled when docked, it is, again, at least in theory, possible to have something that is somewhere between XOne and PS4 while docked.