The signal-processing architecture of passive surface acoustic wave (SAW) sensors presents significant implementation challenges due to its radar-like operational principle and the inherent complexity of discrete component-based hardware design. While System-in-Package (SiP) has demonstrated remarkable success in miniaturizing electronic systems for smartphones, automotive electronics, and IoT applications, its potential for revolutionizing SAW sensor interrogator design remains underexplored. This paper presents a novel architecture that synergistically combines time-domain ADC design with SiP-based miniaturization to achieve unprecedented simplification of SAW sensor readout systems. The proposed time-domain ADC incorporates an innovative delay chain calibration methodology that integrates physical unclonable function (PUF) principles during time-to-digital converter (TDC) characterization, enabling the simultaneous generation of unique system IDs. The experimental results demonstrate that the integrated security mechanism provides variable-length bit entropy for device authentication, and has a reliability of 97.56 and uniqueness of 49.43, with 53.28 uniformity, effectively addressing vulnerability concerns in distributed sensor networks. The proposed SiP is especially suitable for space-constrained IoT applications requiring robust physical-layer security. This work advances the state-of-the-art wireless sensor interfaces by demonstrating how time-domain signal processing and advanced packaging technologies can be co-optimized to address performance and security challenges in next-generation sensor systems.