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We perform a microscopic analysis of the noise associated with the kink effect in short-channel InAlAs/InGaAs lattice-matched high electron mobility transistors (HEMTs) by using a semiclassical two-dimensional (2-D) ensemble Monte Carlo simulator. The kink effect in HEMTs has its origin in the pile up of holes (generated by impact ionization) taking place under the source side of the gate, that leads to a reduction of the gate-induced channel depletion and results in a drain current enhancement. Our results indicate that the generation of holes by impact ionization and their further recombination lead to fluctuations in the charge of the hole pile up which provoke an important increase of the drain-current noise, even when the kink effect is hardly perceptible in the output characteristics. In addition, shot noise related to the hole gate leakage current is found at the gate terminal, which can further degrade the global noise performance of HEMTs. © 2004 American Institute of Physics.