They do this primarily by adjusting the air:fuel ratio (dependent upon a specific grade of fuel-usually 92-93 octane) and controlling the spark advance. Other adjustments to maximize engine performance include torque converter lock-up and altered shift points in electronic-controlled automatic transmissions.
Sounds pretty simple, but the process to get there is not.
These companies use stock trucks to obtain baselines from which to make their adjustments. From here the test mules are modified via new programming through changes in spark advance, air:fuel ratios, and engine temperatures so horsepower and torque are maximized in incremental rpm ranges from off-idle to wide-open throttle. These are usually done in 400-500 rpm increments so that power output is maximized throughout the entire rpm operating range. In the end, a performance chip is designed to provide better throttle response, shift characteristics, towing capabilities, and quarter-mile times (should you be in to sending your Dodge pickup down the straights).
Aftermarket chips come in a couple of different flavors. The most common are what are known as "off-the-shelf" chips. These are chips programmed to deliver optimal performance for a specific vehicle model year and powertrain setup with little or no additional performance modifications.
The second type of chip is the "custom." As we mentioned, performance chips are "computer-built" via programming modifications, then the chips are "burned," or programmed, and ready to install. Because of this, it is not a difficult matter for some manufacturers to make specific program changes to accommodate a truck owner's specific driving style, driving needs, and to work hand-in-hand with previous or planned modifications like cam and head swaps, blower installs, or gear changes. As you know, any changes made to the driveline can either be augmented or hindered by the engine's computer system, so custom chips are the ultimate tools for maximizing the performance potential of any powertrain modifications because they can be programmed specifically with such modifications in mind. And depending on the level of performance parts installed, running a high-flowing modified engine without consideration given to the air:fuel ratio delivered by the computer could result in an overly-lean fuel mix-the result of which can be burned valves, pistons and wrecked plugs. Thus, an aftermarket chip can help prevent damage to a modified engine in some cases.
In addition to the power gains, another plus is that aftermarket chips are one of the easiest upgrades you can perform. Each chip is built so it simply plugs into your truck's computer module, right between the module and the plug-in harness. It's the definition of simplicity.
So, if you're looking to get more kick out of your stock Ram or Dakota, or would like to maximize the gains made possible by intake and exhaust upgrades, an aftermarket performance chip might be your ticket to an extra 10 to 20-something horsepower.