In a medium saucepan, whisk together powdered sugar and cocoa powder. Add butter and evaporated milk and bring to a boil over medium heat, continuing to stir and whisk until all ingredients are incorporated (and not lumpy).

Turn down the heat so that it is still lightly boiling, but not burning. Boil for 7 minutes, stirring constantly with a rubber spatula. Be sure to continue to scrape the bottom so it doesn't burn.

Remove from heat and stir in chocolate chips until smooth. Mix in vanilla.