lilypad mp3 battery charge chip smokes when battery connected!

Hi

I have a 3.7v 1100mAh battery with JST connector connected to lilypad mp3, nothing else as yet connected, this is just to power it up. Check polarity and matched with battery connector. powered up and the small chip between the 3.3v “pin” and the right speaker + “pin” smokes. Disconnected!

Have read on sparkfun site that this chip can become hot “when charging” but i have no other connected source of power.

Any ideas? According to everything i’ve seen this should be fine?