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The selective oxidation on InAlAs by liquid phase oxidation using photoresist or metal as a mask is proposed. Further application to gate insulator of InAlAs/InGaAs HEMT lattice-matched to InP substrate is also conducted. The high mobility electrons are constrained in 2DEG instead of traditional oxide-semiconductor interface. Also, this oxidation provides new opportunities to explore many alternative dielectrics for use as gate oxides and as passivation layers on III-V compound semiconductor devices.