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The density, shape and structure of in-grown stacking faults in 4H–SiC (0001) epitaxial layers have been characterized by cathodeluminescence, photoluminescence and high-resolution transmission electron microscopy. These analyses indicate that in-grown stacking faults are of 8H structure, and are generated mostly near the epilayer/substrate interface during chemical vapor deposition. The impact of the stacking faults on the performance of 4H–SiC (0001) Schottky barrier diodes has been investigated. It is revealed that the stacking faults cause the lowering of Schottky barrier height as well as the decrease of breakdown voltage.