SANTA CLARA, California, March 20 (Reuters) - Intel ( INTC )

is planning a $100 billion spending spree across four

U.S. states to build and expand factories after securing $19.5

billion in federal grants and loans - and it hopes to secure

another $25 billion in tax breaks.

The centerpiece of Intel's ( INTC ) five-year spending plan is

turning empty fields near Columbus, Ohio, into what Chief

Executive Pat Gelsinger described to reporters on Tuesday as

"the largest AI chip manufacturing site in the world" starting

as soon as 2027. The U.S. government announced the federal funds

to Intel ( INTC ) under the CHIPS Act on Wednesday.

Intel's ( INTC ) plan will also involve revamping sites in New Mexico

and Oregon and expanding operations in Arizona, where longtime

chipmaker rival Taiwan Semiconductor Manufacturing Co ( TSM )

is also building a massive factory that it hopes will receive

funding from President Joe Biden's push to bring advanced

semiconductor manufacturing back to America.

The federal funds unleashed by Biden's plan for a broader

chip making renaissance will go a long way to help Intel ( INTC ) mend

its wounded business model.

For decades, Intel ( INTC ) led the world in making the fastest and

smallest semiconductors, selling those chips at a premium price,

and plowing the profits back into more research and development

to stay ahead of the pack.

But Intel ( INTC ) lost that manufacturing edge in the 2010s and its

profit margins plummeted as it cut prices to keep market share

with inferior products. Gelsinger announced a plan in 2021 to

return Intel ( INTC ) to the No. 1 position, but to make the plan

profitable he has said he would need government support.

With that assistance in hand, it's now time for Intel ( INTC ) to

spend. Gelsinger said about 30% of the $100 billion plan will be

spent on construction costs such as labor, piping and concrete.

The remaining 70% will go to chipmaking tools purchased from

firms such as ASML, Tokyo Electron ( TOELF ), Applied

Materials ( AMAT ) and KLA, among others.

Those tools will help bring the Ohio site online by 2027 or

2028, though Gelsinger warned the timeline could slip if the

chip market takes a dive. Beyond grants and loans, Intel ( INTC ) plans

to make most of the purchases from its existing cash flows.

At multiple times, Gelsinger has said that a second

round of U.S. funding for chip factories likely will be needed

to re-establish the United States as a leader in semiconductor

manufacturing, which he reiterated on Tuesday.

"It took us three-plus decades to lose this industry. It's

not going to come back in three to five years of CHIPS Act"

funding, said Gelsinger, who referred to the low-interest-rate

funding as "smart capital".

However, even with the federal backing, Intel ( INTC ) needs to show

that it can compete with its Taiwanese and Korean rivals sooner

rather than later, said Ben Bajarin, the chief executive of

analyst firm Creative Strategies.

"It will be important to know how much longer 'smart

capital' is needed for Intel ( INTC ) before they can stand on their

own," Bajarin said.

Overall, though, Intel ( INTC ) would be the most important chipmaker

for U.S. interests even as rivals built in the in the country,

said Jimmy Goodrich, a semiconductor export and technology

adviser at RAND Corp.

"Only Intel ( INTC ) has the workforce, technology, and supply chain

that is largely U.S. centric. So while what TSMC and Samsung are

doing here is important and should be welcomed, it's also

important to have a strong home team," he said.