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In this study, silicon nanocrystals embedded in SiO2 matrix were formed by conventional plasma enhanced chemical vapor deposition (PECVD) followed by high temperature annealing. The formation of silicon nanocrystals (nc-Si), their optical and micro-structural properties were studied using various experimental techniques, including Fourier transform infrared spectroscopy, micro-Raman spectra, high resolution transmission electron microscopy and x-ray photoelectron spectroscopy. Very strong red light emission from silicon nanocrystals at room temperature (RT) was observed. It was found that there is a strong correlation between the PL intensity and the substrate temperature, the oxygen content and the annealing temperature. When the substrate temperature decreases from 250 °C to RT, the PL intensity increases by two orders of magnitude.