Peel and finely mince the yellow onion until you have about 1 cup. Sprinkle the minced onion with the granulated sugar and white vinegar in a small bowl, toss to combine, and let sit 10 minutes. This softens and mildly sweetens the onion and reduces sharpness.

Soften cream cheese

If the cream cheese is not fully softened, microwave it in a small bowl for 8–10 seconds or let it sit at room temperature 30 minutes so it blends smoothly with the other dairy.

Combine base

In a medium mixing bowl, whisk together 1 cup mayonnaise, 1 cup sour cream, and the softened 4 oz cream cheese until smooth and homogenous. Use a hand whisk or spatula to eliminate lumps.

Season and fold onions

Drain any excess liquid from the marinated onion if there is a lot; you want the onion moist but not watery. Stir the minced onion into the dairy mixture along with 1 tsp garlic powder, 1 tsp onion powder, 1 tbsp dried chives, 1 tsp dried parsley, 1 tsp kosher salt, and 1 tsp freshly ground black pepper. Add 1 tsp lemon juice if using to brighten the flavor. Taste and adjust seasoning if desired.

Chill 24 hours

Transfer the dip to an airtight container or cover the bowl tightly with plastic wrap. Refrigerate for 24 hours to allow the flavors to fully meld and for the onion to mellow. Stir once more before serving to reincorporate any separated liquid.

Chips & Garnish

About 10 minutes before serving, transfer the dip to a serving bowl and sprinkle the top with the 2 tbsp thinly sliced fresh chives and the optional 1/4 tsp extra cracked black pepper for presentation and a fresh oniony color contrast.

Arrange 8 oz (about one standard bag) of sturdy, ridged potato chips around the dip or in individual bowls. Serve immediately so chips remain crisp.

If storing leftovers, keep dip refrigerated up to 4–5 days. Stir before serving; chips are best consumed fresh.