Computer chip and ET's

[DaTank]

Alright, I need some help. I am in an arguement about how much horse power a computer chip can add to a mustang or any car for that matter. I am not a mechanic by any means, but my theory is a chip can add some horse power, but if you don't have the engine component upgrades to handle the changes the computer wants to make, it won't make much of an increase HP. So if I had a stock 5.0 mustang and changed only the chip, how much could that, theoretically, decrease my ET time.
One more theory I have on that. It would be like changing my computer modem to a 56K (like a chip in a car) but when I sign on it only runs a 33.5 or so, because it only has the capabilities to run at that speed do to the ISP components (like a stock engine and not an upgraded engine).
Am I making any sense or am I way off. My nephew is telling me that his friends stock WRX turbo could knock off a full second by changing the exhaust and computer chip only. I felt that was a lot for just those mods.

What do you think?
Thanks,
Brad