Mobile phone theft has risen by 190% since 1995
Designed by US chipmaker Xilinx, the programmable chip allows mobile phone operators to remotely disable handsets with a password given to them by the owner of the stolen phone.
Xilinx's CoolRunner chips have been on the market for around two years but recently the firm discovered it could use its programmable features to aid in the fight against phone theft.
"If a phone is stolen the person can phone up their operator, give a code and make sure the handset is useless to the thief," said Karen Parnell, European marketing manager for Xilinx.
"If the phone is recovered, the action can be reversed so it can be used again by the owner,"
Mobile crime on the rise
Mobile phone theft is becoming an increasing concern for the UK Government.
About 700,000 handsets were stolen in the year 2000.
Since 1995, the crime has increased by 190%, prompting one judge last week to impose a four-year sentence as a deterrent.
Crime reduction charity Nacro believes that adapting mobile phone technology will be key to dealing with the problem.
"If you want to tackle mobile phone theft you have to make them less attractive to thieves by altering the technology," he said.
Blowing up mobiles
Currently, handsets are objects of huge desire with thieves, who discard the SIM card and replace it with a hacked card, which allows completely free pay-as-you-go calls.
Other solutions to the problem of theft include a technology developed by the University of California, US, which enables operators to "blow up" mobiles after they have been stolen.
Text message "bombs", in which a stolen phone is bombarded with enough SMS text messages to cause the phone to shut itself down is another method of disabling stolen handsets.
Xilinx is currently in talks with the large mobile manufacturers such as Nokia and Ericsson about incorporating the chip into their handsets.