Basically (if I remember correctly), pretty much any conductor that isn't a superconductor will fail to transmit some percentage of the electricity that flows through it; this is known as "resistance". The electrons that do not pass through the substance instead "bump into" the material; this causes the atoms of the material to move or vibrate. And, of course, it is the vibration of atoms that we call "heat".

Eventually, this vibration will cause the material to deform or even evaporate. And, because the flow of electrons always causes resistance, your electronics are in fact always deforming / evaporating right before your very eyes, so long as they are on.

Certainly, if a chip is hot to the touch, you can be assured that it is dying more quickly than if it were cool to the touch. But you don't need to heat the entire chip to cause the problem; even running current through a single trace on the chip at 150% of its rated value is going to cause that part of the chip to die at a faster rate than normal.

In any case, I think Aristotle put it best: "All Macines are Mortal". Be nice to your N900, there are only so many left in the world...