The new chip would be smaller than the prior "Wear chips" and is supposed to provide slightly better battery life.
"The chip supports LTE, up to a 5-megapixel camera, location tracking and plenty of other sensors," The Verge reported late on 26 June.
"Kids' watches are built to give kids the ability to keep learning and connecting with gadgets when they leave the house and find themselves in school, where they aren't always beside a computer," Pankaj Kedia, who leads wearables at Qualcomm, was quoted as saying.
However, "Snapdragon Wear 2500," would not support Google's smartwatch operating system (OS) "Wear OS".
Instead, it would be paired with a custom version of Android that Qualcomm has built for kids' watches called "Android for Kids" that would come preloaded with apps and games.
Qualcomm has started providing the "Wear 2500" to hardware partners and Huawei could be among the first partners, the report said.
Qualcomm is also planning to launch its next general-purpose smartwatch chip meant for "Wear OS" watches "but there is no word on when that would happen as of now".
The chipmaker announced its last processor for wearables, the "Snapdragon Wear 2100," in February 2016.