WASHINGTON, March 20 (Reuters) - The Biden

administration said it is awarding Intel ( INTC ) nearly $20

billion in grants and loans on Wednesday, supercharging the

company's domestic semiconductor chip output and marking the

government's largest outlay to subsidize leading-edge chip

production.

Biden will announce the preliminary agreement for $8.5

billion in grants and up to $11 billion in loans for Intel ( INTC ) in

Arizona, with some of the funding to be used to build two new

factories and modernize an existing one.

Commerce Department Secretary Gina Raimondo called it a

"huge deal" and one of the largest investments ever in U.S.

semiconductor manufacturing.

"It means leading-edge semiconductors made in the United

States of America," she said on Tuesday, noting that the

country's share of leading-edge chip production is now at zero

but may rise to 20% by 2030 thanks in part to the subsidy

program.

The goal is to reduce reliance on China and Taiwan, as the

share of global semiconductor manufacturing capacity in the U.S.

has fallen from 37% in 1990 to 12% in 2020, according to the

Semiconductor Industry Association.

Reuters first reported news of the trip to Arizona, a

critical political swing state that Biden, who narrowly won the

state in 2020, hopes to win in November in his matchup against

Republican former President Donald Trump.

The historic outlay shows the Biden administration is

betting big on Intel ( INTC ) as part of the 2022 CHIPS and Science Act,

a bid to boost domestic semiconductor output with $52.7 billion

in funding, including $39 billion in subsidies for semiconductor

production and $11 billion for research and development.

Commerce is dedicating $28 billion for government subsidies

for chips manufacturing - although it has more than $70 billion

in requests - and also has $75 billion in lending authority.

The announcement in Arizona could also help Democrats defend

a critical U.S. Senate seat in the November elections and

possibly provide a boost in a pair of competitive House of

Representative races.

Arizona was a point of pride for Biden's 2020 campaign,

which flipped the southwestern state for the first time in six

presidential elections, but his aides see delivering a repeat

victory as a tall order.

It is also welcome news for Intel ( INTC ), which in January forecast

first-quarter revenue could miss market estimates by more than

$2 billion, as it grapples with uncertain demand for its chips

used in the traditional server and personal computer markets.

Last month, the Biden administration awarded $1.5 billion to

GlobalFoundries ( GFS ), the world's third-largest contract

chipmaker, to build a semiconductor production facility in

Malta, New York, and expand existing operations there and in

Burlington, Vermont.

In January, Commerce announced Microchip Technology ( MCHP )

would get $162 million in government grants, allowing the

company to triple production of mature-node semiconductor chips

and microcontroller units at two U.S. factories.

Awards for South Korea's Samsung and Taiwan's TSMC are

expected in the coming weeks.

In addition to Intel's ( INTC ) Arizona projects, the money will help

fund Intel's ( INTC ) delayed leading-edge factory construction project

in Ohio, a nearly complete advanced packaging facility in New

Mexico, and a research and development facility in Oregon.

Officials declined to detail how much money would flow to

each project.

In addition to the funds slated to be announced on

Wednesday, Intel ( INTC ) is expected to receive as much as $3.5 billion

from the Commerce Department to boost security at its Arizona

facilities to produce sensitive chips for the military.