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The actual design of the microprocessor is done first at a logical level. The processor is defined in terms of its desired operation, what instructions it is meant to operate on, and how data is intended to flow between its various logical parts. This high-level design starts at a very conceptual level, and proceeds to more detailed levels where the various architectural features of the chip are defined in great detail, such as how instructions will be decoded, how the control unit(s) will function, etc. This is a very abbreviated description of the process, which involves hundreds or even thousands of engineers and takes months or years of time depending on how advanced the device is and also on how much is borrowed from previous designs.
Once the processor has been fully defined in this manner it is laid out physically. The actual transistors necessary to implement the design are determined and a physical map is created showing how the chip must be fabricated. In real life there isn't just one design that is then mapped out in this way once; it is an iterative process with changes being made all the time in the design, due to bugs, enhancements, marketing issues, or manufacturing concerns.