Australia has a similar service which has been in operation since December 2009.
In the current version, a voice message is sent to every land line, and an SMS message is sent to every mobile phone based – this is based on the billing address of the phone. So if the phone was registered to someone in a particular postcode/zip, and an emergency occurs in that area, a message is sent.
In the updated version, I believe the message will be send to all phones which are actually “active” in a particular coverage area ; I’m not sure what the ETA of that is.
There is no requirement for a “special chip”, however in Australia, all phones must be registered and all are digital (GSM or 3G), I’m not sure if that is the difference ?