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Believe it or not, I've actually seen chips out there that were basically neutralized by the cars engine management system. Often, chips may lean the fuel mixture out a bit and increase timing. In some instances though, this can lead to detonation or knock, in which the computer will only richen the mixture and retard the timing, basically undoing what the chip was intended to do.
It IS possible for chips to cause damage, in that they may cause detonation if your octane level is too low. Even if they do work, the power gains are minimal, and the money can be put to much better use, i.e intake and exhaust.
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