When you say that the chips are down, what you mean is that you are in a difficult or dangerous situation. It’s the type of situation, which helps you realise who your true friends are.
Here are a few examples. * When the chips were down, all the employees rallied around the Chairman. * Sekhar was always there to help out when the chips were down.
The “chips” referred to in the expression are the ones that are generally used in gambling. We have all seen movies where the hero and the villain play cards and they keep increasing the stakes by throwing plastic chips on the table. These coloured chips are a substitute for money. So when you are gambling and you find that your chips are down, what it means is you are losing. You are in a “difficult situation” because you don’t have much money left. Another expression, which has more or less the same meaning, is “when the going gets tough”. You know what they say, “When the going gets tough, the tough get going”!