Here's what happens:
* Chip's Purpose: Chip is a young creature from the planet Gaia that helps Sonic collect the Gaia Temples.
* Eggman's Capture: After Sonic defeats Dark Gaia, Eggman appears and reveals that he had been manipulating events to capture Chip all along.
* Chip's Role: Chip's capture is not a fatal event. He remains alive and imprisoned, leaving a cliffhanger for potential future games or stories.
While Chip's capture is a major plot point and sets up a potential sequel, it's important to remember that he doesn't die.