Uh-oh, Apple! According to various reports, Chinese hackers have cracked the algorithm used to generate iTunes gift card codes, and are now selling $200 iTunes gift cards online for as little as $3.

Apparently the algorithm was quietly cracked months ago, but prices on the pirated iTunes codes are plunging as more and more vendors get in on the action. A post today on the Chinese music industry blog Outdustry brought the issue to the world's attention, and now everyone's in a tizzy.

It's not clear what this means for Apple (and the company hasn't yet reacted publicly to the issue), other than they could see tens of thousands of dollars of songs, movies and apps essentially stolen from iTunes, especially as these codes spread from China to more accessible sales outlets in the West, like eBay and Craigslist.

Maybe Apple has some secondary way of identifying legit iTunes codes that they can put into effect, but if not, they may have to go to the extreme length of switching up the code-generating algorithm. That would render the hacked codes unusable, but it would also void every legally bought card that hasn't yet been redeemed by its owner, as well as all the cards currently for sale at retail.

If you've got iTunes gift cards you haven't entered into your iTunes account yet, you might want to do so pronto, just in case Apple has to take the extreme measure of nuking the current crop of codes, recalling gift cards already at retail and finding some way to compensate legit owners.