The Inhibitor Chip is a chip that protects Otto Octavius' higher brain functions and keeps his tentacles from taking control of him.
History[]
Spider-Man 2[]

Otto Octavius first Inhibitor Chip
When he first meets Peter Parker, Octavius appears to be working on his inhibitor chip.
At the demonstration of his Fusion Reactor, Octavius explains about his inhibitor chip when a reporter expresses concern that the tentacles' AI will overwhelm him. However, when he is hit by a surge of energy from his out-of-control experiment, the tentacles are fused to Octavius' back and the inhibitor chip is destroyed.
Subsequently, without the inhibitor chip, Octavius falls under the influence of his tentacles and he becomes the supervillain known as Doctor Octopus. During his second attempted fusion experiment, the tentacles are damaged when Spider-Man electrocutes them again, subduing them for a brief period of time and allowing Spider-Man to reach out to Doctor Octavius by appealing to his intellect and revealing his true identity as Peter Parker. Realizing that Peter is right, Octavius manages to retake control of his tentacles without the chip and sacrifices himself to stop the reactor from destroying the city by drowning it into the river.
Spider-Man: No Way Home[]

Otto Octavius second Inhibitor Chip
Having been pulled into an alternate universe from where he was arguing with his Peter Parker, Doctor Octavius is once again Doctor Octopus, having not yet regained control over his tentacles. While trying to come up with a cure for Octavius, MCU Peter discovers the destroyed inhibitor chip and uses a Stark Industries Fabricator to build him a new one. Despite Octavius' attempts to resist, MCU Peter installs the new chip to the back of his neck, which is bigger and more advanced than the old one. However, once the chip was installed, Octavius fell unconscious while the tentacles powered down. Although, Octavius regain consciousness as he realized that he can control his tentacles again and commented on how quiet it was as he'd nearly forgotten the feeling. Octavius then joins the MCU Peter in creating cures for the other villains.
However, Electro attempted to destroy Octavius's chip, after stating that he'd liked him better as Doctor Octopus, by hitting him with a massive blast of electricity. However, Electro's attempt failed as the MCU Peter made the new inhibitor chip out of metal so it would't be fried or destroyed like Octavius's first one. After realizing that the MCU Peter truly made his new inhibitor chip way more advanced then his first one and Electro attempts to revert him back to his altar ego, Octavius decided to play along as he pretended to be Doctor Octopus once more when he arrived at the Statue of Liberty. However, Octavius revealed his ruse as he tricked Electro in order to get close to him and help the three Spider-Men. Octavius was later returned to his own universe with his new inhibitor chip, full control over his tentacles and a chance at a better future.