Wood chips can build up on the bottom of the jig and in between the blank and the guide block. It’s important that the blank is properly seated at the bottom of the jig and against the guide block. Be sure to check this area each time before you drill a new plug and remove any wood chips.
It feels to me there is more force on the blank than when drilling a pocket hole in a workpiece. Just like it’s important to make sure the blank is properly seated it’s also important to make sure it’s properly clamped in the jig. If the blank shifts or twists in the jig it could cause the plug to chip. Adjust the clamp so it’s slightly tighter than when you’re drilling pocket holes. Clamp the blank in the jig and give it a tug to be sure it’s secure.
There’s a lot of friction when drilling pocket hole plugs and this friction creates heat. To reduce heat buildup use the vacuum port and a Shop Vac to remove the wood chips while drilling. It’s also a good idea to allow the bit to cool between drilling plugs. Oh and don’t touch the bit to see if it’s hot. Trust me, it gets hot!