Meanwhile, in 1-quart saucepan, heat 1 cup sugar sugar, 1/4 cup butter and the milk over medium-high heat, stirring occasionally, until mixture boils. Boil 1 minute. Remove from heat; cool 5 minutes. Stir in chocolate chips until melted. Slowly stir in enough water until frosting is smooth and spreadable. Frosting sets up quickly, so thin as necessary with additional water.