The manufacturing and grading of families of microprocessors

Intel produces families of seemingly similar microprocessors. For example,

Does (or likely would) Intel produce processors like these three

1. on separate manufacturing lines;


2. on the same manufacturing line, but in separate runs on different days;


3. on the same line all in one, indiscriminate run, and only later -- at a test stage -- grade the processors, sort them by grade, and assign them model numbers accordingly; or


4. in some other way I do not understand?

All of these seem plausible to me except maybe option 1, but what seems plausible to me may have little to do with how a firm like Intel actually manufactures parts.

Please feel free to construe the question broadly. I am most curious to learn the basics of how such manufacturing is organized in modern practice.

UPDATE

@Shantam gives a better word to use with the search engine: binning, rather than grading. Searching with @Shantam's word, one finds @nik's interesting comments three years ago on Superuser.com:

Actually, manufacturers are a smart lot. They 'bin' their produces into different levels of failures. A partly failed cache in a processor instance could become the 'lesser cache, cheaper version' instead of going into the trash bin. Works quite well with the amount of failures seen in fabrication and the surface area of such memory modules (entire cores are 'wired down to sell the instance as a lower range processor -- the Phenom X3?). Nothing wrong in this, and the overclockers are happy to know such things.

The overclocker angle goes this way, if a processor cannot run (heats up) beyond certain frequencies, it is binned to a lower freq target. You get a E6300 C2D (which an overclocker can push up to a higher one with better cooling and maybe good luck on the manufacturers strict 'binning' policies that might have erred towards the lower frequency bin.

Answer

Most microprocessor manufacturing (along with countless other devices) undergo the process of binning: all similar products are made at once, and depending on their performance, are placed into "bins" (groups) of similarly performing products, and then packaged and sold accordingly.

In the case of Intel processors (AMD is similar), generally processors within the same line are manufactured together, and are binned according to their stable clock frequency. You can tell when a processor is part of the same "line," by looking at the core codename, or if that is not specific enough, the features of the core (as mentioned by embedded.kyle, the i5 doesn't have hyperthreading, but the i7 does, even though both in question are "Sandy Bridge").

Sometimes a higher-end processor that fails can still be sold as another. An example I know first-hand is that the M0 steppings of the old Northwood-core Pentium 4's (130nm process) were actually failed Gallatin-core processors (which was the core for the P4 "Extreme Edition"). Similarly, a lot of people had/have luck unlocking extra cores, caches and shader units on various CPUs and GPUs. For example, it is quite common to be able to buy a mid-high range video card (take for example, the AMD Radeon 6850) and flash it with the BIOS of the higher-level card (the Radeon 6870, in this case) and gain the extra things that card has (some extra shader cores). This also has to do with binning during the manufacturing process.

This sort of thing drives overclockers to take good note of the stepping, place of origin, and batch number of their processors. When word gets out that certain batches of processors are overclocking better than their not-as-potent brethren (same CPU, mind you, just made at a different time or place), they become more in demand.

If you're interested more, definitely search "CPU Binning," or read up at some forums. I'm a member at www.overclockers.com, and the forum there is quite welcoming and has a wealth of past and current knowledge (along with an abundance of fantastic members).