1 The pieces cut off timber in the royal dockyards in Britain during the days of wooden ships when the dockyard carpenters shaped planks etc. for shipbuilding and repairs. They were by tradition the perquisites of the carpenters and shipwrights, and could legally be carried out of the dockyard. It was a system which lent itself to considerable abuse, and whole planks and other timber were often carried out on the grounds that they were chips. There were many cases, particularly during the 17th century, when dockyard officials were found to have built whole houses and much of their furniture out the ‘chips’ they had taken out the dockyards.
2 In the US Navy, the ship's carpenter is nicknamed ‘Chips’.