[Lil bastard]

The 'chip' is technically a transponder coil, more specifically a magnetic-coupled transponder coil, basically meaning that is has a non-volatile memory and does not need it's own electrical energy to operate. Since it has no power of it's own, it's range is very limited - usually 0.3"- 6.0".

When the actual key is inserted into the ignition lock and turned to position '1' or '2', an induction coil that is mounted around the ignition lock is energized and sends out an electromagnetic field of energy. The windings in the transponder chip absorb that energy and power the electronic chip to emit a signal.

The induction coil around the ignition receives the signal and sends it to the DME for recognition. If the signal is recognized as being already in the DME’s memory, the signal is accepted and the vehicle is 'allowed' to start.

Proximity is the key here, your 'chip' must lie within the range described. This will give you a clue as to where to look for it. Having some magnetic components in it, you should be able to find it using a magnet passed slowly, and closely, over the carpet. The chip should be attracted to the magnet.

It doesn't strictly interfere with the operation of the alarm, only the immobilzer circuitry.

You should find it though because a thief could 'jimmy' the ignition lock and energize it's inductor coil which would turn off the immobilizer because of the proximity of the chip.

If you cannot find it, it can be removed from the DME's memory using a PST2 or PIWIS tester, making this particular chip now useless.

The DME can be programmed for up to 4 transponder coils allowing you to have 4 spare keys. Your new key can be programmed into the DME using it's unique 24 digit Code No. (on barcode label on key grip).