But the failure rate after initial burn-in is phenomenally low. They're solid state devices, after all, and the only moving parts are electrons.
As years go by, the chip starts slowly degrading and some of the high performance chips start to get higher temperatures, worse power consumption, needs higher voltages, etc. The power management software counters this by keeping the clocks lower and the voltages higher, causing performance degradation over time to avoid catastrophic failure.
When the same chips are used in products with higher reliability requirements, they are clocked down and more conservative power management software is utilized.
disclaimer: not my area of expertise, I work on something completely different than power management.
That said, it would really interesting to see just how much the CPU actually degrades over time. I guess it's around few percent.
I'm not sure that bodes well for smart watches selling at 4+ figures.
As for the whole market segment of "this watch will pass through generations", I guess the honest thing to say is that we just don't have that kind of experience with integrated circuits yet... besides, does this type of traditional watch never need repairs? They must have failures as well.
I'm pretty sure the smart watch makers don't expect them to last for too many years, definitely not decades. After all, they want to be selling you a smart-er watch in just a few years.
This consumerism drives the whole thing, if your new watch was to last decades it would be designed in a whole different manner. And it's not only the chips, you won't be able to get a compatible display, battery, PCB or case or anything to replace a broken/worn out one in just a few years.
This sad state of consumerism is why I do woodworking to balance my mind. The pinewood dovetail box I built last week will still be there when I'm dead.
After the 2 year mark the chip became unstable and over the period of the next 6 months the clock speed it would reliably maintain was 3.2Ghz. On that progression it would be down below its default rated speed of 2.6Ghz in presumably another 6 months or perhaps outright failed.
The current estimate is that Intel targets about 15 years for a CPUs life at the clock speeds they ship, overclocking can vastly decrease that.
SSDs are solid state (duh) as well, and yet they degrade over time.
For example Nvidia runs it's GTX 980 and GTX 970 production at the same time. The only difference is GTX970's can have up to 2 of their compute units non-functional.
This is very commonly done in the industry. If you remember Phenom Dual, Tri, and Quadcores. Which were the same chip, just it was expected that only 5% of produced chips would be fully featured quad cores, the rest would be sold as other core counts. This was done with 27xx series i5, which were 34xx core i7's but with hyper threading disabled due to issues with yields on dye shrinks.
If a single transistor fails, normally the whole thing dies.
For large, expensive parts or parts in which a single common defect could easily blow the whole yield (for example DRAM, especially when embedded, CPUs with lots of cache or cores, and so on), regions (or rows and columns of memory) are generally fused off so that if one specific region fails qualification, it can be disabled without discarding the whole chip. This is the source of most 3-core CPUs, as well as the difference between most models in a single CPU family (they're often binned off based on how much of their L2 cache actually works).
However, once parts are manufactured and qualified, they're pretty much done. Some hardware has BISR (Built In Self Repair) but as far as I know it's not particularly common outside of DRAM.
No one has yet figured out a way to have a shorted polysilicon feature un-short itself in situ. :)