To provide a method of manufacturing a semiconductor device of high manufacturing efficiency, inexpensive semiconductor device, and a light emitting diode.

A manufacturing method comprises a step S101 in which an epitaxial layer is grown, a step S102 where a semiconductor substrate is melted, a step S103 where an epitaxial layer is ground, a strain removing step S104, and a product commercialization step S105. In the step S101, a first clad layer, an active layer, and a second clad layer are sequentially grown on a semiconductor substrate by a liquid epitaxy method. A semiconductor substrate is removed, and an epitaxial wafer composed only of an epitaxial layer is formed in the melting step S103. The surface of the second clad layer is ground so as to make the epitaxial wafer uniform in thickness in the grounding step S103. Strains developed in the epitaxial wafer are removed in the strain-removing step S104. A light emitting diode is formed last into a product by a die-bonding and wire-bonding operations in the commercialization step S105.