Intel CEO Pat Gelsinger downplayed foundry acquisition rumors telling analysts the company was “very happy” with the buildout of its foundry business during the company’s second-quarter 2021 earnings call.

Last week, the Wall Street Journal reported Intel could pay as much as $30 billion for rival foundry operator GlobalFoundries to bolster its standing as a contract semiconductor manufacturer.

“At this point we would not say M&A is critical, but nor would we rule it out,” Gelsinger said in response to analyst questions.

While Gelsinger didn’t directly address GlobalFoundries by name, he said market consolidation in this space is likely over the next few years. “The intense R&D, the need to move to modern and leading edge nodes, the capital investments required — we simply view that smaller players simply won’t be able to keep up, and the foundries without leading edge capabilities will be left behind,” he said.

Intel has aggressively built out its foundry capacity since announcing it would open its chip fabs to contract manufacturing in March. The company will spend in excess of $20 billion in 2021 to realize these aspirations, beginning with two foundries in Arizona, with more foundries in the U.S. and Europe expected to be announced before the end of the year.

While Intel’s Q2 revenue exceeded guidance by $700 million, it remained flat year over year at $19.1 billion, while the company’s net income recovered significantly from the prior quarter coming in at $5.1 billion.

Due to the improving conditions, Intel raised its full-year 2021 guidance by $1 billion to $77.6 billion

“This upside was led by continued strength in our PC business, and earlier-than-expected recovery in both our IOTG business, and the enterprise portion of the data center segment,” Intel George Davis said on Thursday's call.

PC sales continued to prop up the chipmaker during the quarter with Client Computing Group revenue up 6% year over year at $10.1 billion.

Intel's Data Center Group, which has suffered declining revenues over the past few quarters, also showed signs of improvement. Its revenue fell 9% year over year in Q2 compared to a 20% decline last quarter.

Intel’s Mobileye autonomous driving division and Internet of Things Group (IOTG) saw some of the strongest growth in Q2 up 124% ($327 million) and 47% ($984 million), respectively.

Looking ahead to the third quarter, Intel predicts revenue to hit $19.1 billion and full-year 2021 revenue to reach about $77.6 billion. Capital expenditures are expected to come in at between $19 billion and $20 billion in line with the chipmaker’s planned foundry expansion.