Stir together the vinegar, grape jelly, paprika, mustard powder, brown sugar, bottled sweet chili sauce, and water in a 2-quart saucepan over medium heat. Bring to a boil, turn heat to low, and simmer for 5 minutes.
Mix in the chipped ham and stir to combine with sauce. Refrigerate overnight.
The next day, bring the sauce and ham slowly to a simmer over low heat and cook 1 hour, stirring occasionally.