Mod chips take the form of a small circuit board that connects to a console's electronics and overrides or bypasses software verification functions.

Nintendo describes mod chips solely as allowing "the play of pirated Wii discs or illegal copies of Nintendo games downloaded from the internet".

In reality, the devices have a number of other uses, such as making back-up copies of fragile game discs, and temporarily modifying games to make them easier to play. In theory, they also allow independent software developers to create software for consoles without purchasing an expensive development kit or signing a contract with the console vendor.

"Copying the developers' work and spreading the game files globally is blatant stealing. [Piracy] can destroy years of hard work by a team of very talented software developers," claimed Jodi Daugherty, senior director for anti-piracy at Nintendo of America.

The Hong Kong company that was raided, Supreme Factory Ltd, "has ties to a French company, Divineo SARL, and its principal, Max Louarn, who are also named in the legal action initiated by Nintendo," Ninendo announced.

Supreme Factory Ltd appears to be a source of mod chips for several vendors, including Team Cyclops. Online sources suggest that some or all of these vendors, however, are linked to Divineo. Divineo is also allegedly the operator of online gaming website, Maxconsole.

Last September, Divineo and Louarn were ordered to pay more than $9m by a US court for selling mod chips that violated the US Digital Millennium Copyright Act (DMCA).

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