Yes, I believe more than likely it is. You cannot sell or install mod chips in the US. Not that it stops any of us, but I wouldn't do it as a business.
That is somewhat debatable. All the publicized cases in the US have centered around piracy (ie the seller was also offering burned games) even if the news story covering it highlighted "ooh, mod chips!" If the chip contained copyrighted code (say an Xbox 1 chip with the Microsoft BIOS on it), then that could be considered piracy as well. There are also DMCA concerns, but that has never been tested in court against the first sale doctrine (it's my hardware I can do what I want with it). The interoperability portion of the DMCA may also come into play. Thinking of the Xbox 360 and PSP mods which don't involve chips. The 360 specifically just uses some basic wires and freeware code to enable the system to boot Linux. It is a question mark that hasn't been cleared up, especially given the current status of the PlayStation 3. If GeoHot releases his code and that has the side effect of letting copies run, is it a DMCA violation or is it covered under interoperability simply because it allows consumers to restore a feature that was disabled by Sony? If/when a pure modchip case (one where the seller had -zero- piracy involvement and wasn't selling pirated games alongside the mods) goes to court in the US with current hardware it will likely be a landmark point in American copyright law. Until then, no one can tell you for sure that it is or is not illegal. In Australia however, perfectly legal if my understanding of the court cases is correct. -hl718
