Chip was originally a young human boy; however, on the night that The Beast turned down the Enchantress who was disguised as an old beggar woman he was changed alongside the other members of the castle. When Chip was turned into an object (like the other servants and inhabitants inside the castle, aside from the Beast) he took the form of a small teacup with a chip in the side, his mother, Mrs. Potts, took the form of a large teapot.
The story in which Chip stars in, Beauty and the Beast, was written and adapted by several different authors throughout history; however, the most popular version was written by Jeanne-Marie Leprince de Beaumont.
Disney decided to take this version of the tale, alter it slightly to make it more child-friendly, and adapt it as an animated feature.
It is unknown who the true creator of 'Chip' is due to the fact that so many versions of the fairy tale had been circulating around Europe during the 1700's.
Major Story Arcs
Beauty and the Beast
When Maurice, Belle's father, becomes lost and stumbles upon Beast's castle he is met by many of the "objectified" inhabitants such as Lumiere, Cogsworth, Mrs. Potts and Chip. To make his stay more comfortable Mrs. Potts poured Maurice a cup of tea, using Chip as the cup, which startled Maurice as Chip laughed when he brushed up against his thick mustache. Chip, along with the other objects, ran when Maurice was discovered by the Beast, afraid of his violent reactions.
As time passed another wanderer found their way to Beast's castle, this time a girl named Belle, the daughter of Maurice who was attempting to find her lost father. News of Belle's arrival swept through the Castle as Chip and the other inhabitants became excited that a girl was around to potentially break the curse that had been cast on them 10 years prior. When Belle takes Maurice's place as Beast's prisoner the inhabitants become happy, realizing that they now have a chance to become human again.
While preparing for Belle's dinner, Mrs. Potts informs Chip that he must sleep, thus he misses out on the large event that is Lumiere's song "Be Our Guest". He is later seen during the dinner scene between Belle and the Beast as one of the many teacups. Chip is then seen again when Belle is leaving the castle, released by the Beast so she can take care of her father and because the Beast loves her too much to keep her prisoner, not understanding what all of this means Chip hides in Belle's bag, wishing to spend more time with her.
Chip makes his presence known when Belle arrives back at home, popping out of her bag and asking why she left, assuming it was because she didn't like them anymore. Belle reassures Chip that it isn't that she didn't like them anymore, she just had to attend to her father who had previously been injured by Gaston and the other townspeople, in an attempt to show the townspeople that her father wasn't crazy and that there was indeed a Beast she used the magical mirror to show them. This plan backfires and Belle and her father are locked in the basement; however, Chip is able to free them by using Maurice's wood-cutting invention to hack away at the basement door, proving his usefulness to Belle and Maurice.
When Belle and Maurice rush to the castle to warn the Beast about Gaston Chip is brought along, presumably in Belle's bag. Belle was too late to actually warn Beast; however, Beast and the other inhabitants of the castle were able to fend Gaston and the townspeople off, but the fight drained Beast of much of his power leaving him nearly dead. Belle begged and pleaded that he not die for the fact that she was in love with him, that phrase causes the Beast to transform back into a Human just in time, along with the other inhabitants, thus breaking the curse. Chip is seen in his human form rushing into the arms of his mother, Mrs. Potts.
In Other Media
Chip makes a small cameo in the video game known as Kingdom Hearts II.