Does "Silicone Degradation" Exist?

[iMacG4Guy]

Will a processor chip with no issues slow down as miles are clocked? ex. Computer A and Computer B are exactly the same in specs and setup. If Computer A is used 24/7 for 10 years, and Computer B is only used 5 hours a week for 10 years, would Computer B operate the same task faster than A?

This is ignoring things like a failed HDD or bad memory. Specifically targeting the logic board/cpu/gpu.

Reason I ask is I have a 2002 PowerBook that was clearly never used and a 2006 PowerBook that was clearly heavily used. Both have new HDD and RAM, yet the 2002 operates smoother and faster on the same tasks, even though it's a slower, older processor.

[DieHard]

Will a processor chip with no issues slow down as miles are clocked? ex. Computer A and Computer B are exactly the same in specs and setup. If Computer A is used 24/7 for 10 years, and Computer B is only used 5 hours a week for 10 years, would Computer B operate the same task faster than A?

Sounds like an interesting hypothesis... but... Nope;  I test machines that are 20 years plus old and they have the same CPU benchmarks as they did at the time of manufacturer; Now that being said there are many variables when it comes to old Macs and other vintage computers.
Heat is a real enemy... as boards micro-crack, warp, blow capacitors... as humidity and oxidation wreaks havoc on contacts, components,  and buses; you may develop performance issues that make it seem logical that the machine is suffering from "overuse" but this is just a manifestation of physical "abuse" 

I am in Southern CA and electronics love it here.  The dry cool air of storage keeps stuff like new; and if you are diligent when it comes to fans and arctic silver; these ancient macs pass all their extended diagnostics without issue. When I lived in New York, I saw first hand what humid, salty, air does to electronics and it is not a pretty site

This is ignoring things like a failed HDD or bad memory. Specifically targeting the logic board/cpu/gpu.

See above, many very old logic boards, CPUs, and GPUs thrive if they are cared for over the years regardless of use.

Reason I ask is I have a 2002 PowerBook that was clearly never used and a 2006 PowerBook that was clearly heavily used. Both have new HDD and RAM, yet the 2002 operates smoother and faster on the same tasks, even though it's a slower, older processor.

Well, you did not mention the apps or what the "same tasks" are, but I think you are missing an inherent difference between the 2 units.  there are more variable than just the "older, slower CPU" Cache, DMA, OS Version, Chipsets, drivers, app version and many more items are in the mix besides the CPU

[IIO]

this reminds me on the stories after which music CDs would sound better when you store them in the deep freeze.