From this page of the Valheim game guide, you will learn where to obtain chitin.
Chitin is a material that is required to make certain powerful pieces of equipment. Unfortunately, obtaining it isn't the easiest thing to do - you'll only find it on the back of the Kraken, an enormous creature that lives in the ocean. As a result, you will have to venture into the high seas in order to find it.
The part of the Kraken that is visible above the surface of the water resembles a small, vegetation-free island with a regular shoreline. The creature is neutral to you, so it won't attack you when you climb onto it.
While on its back, you need to locate small gray circles - these will provide you with chitin. Simply mine them using any type of pickaxe. You will need to hurry, as the first hit will provoke the creature and it will start to submerge.
Keep in mind that the Kraken will remain in the same spot until you hit it. This lets you mark its location so that you may return later to extract the resource.