As I understand it, there IS no chip until this piece of tooling comes into play. The clay/composite is blanked out and a round piece of the dough is placed into this mold, along with the center inlays if there are any. The mold is closed and the impression of the mold devices is made in the soft clay. After removal from the mold, the clay dries and cools and you remove the rough edges and have a finished chip.

Bill Borland's store used to have a display on the wall that showed the clay as it changed shape through the various steps of blanking, adding inserts, adding inlays, and the finished chip. I seem to recall someone posting a scan of that wall display on this board a year or two ago. Maybe he will do so again.