A sapphire substrate (1) is etched in a stripe pattern having a width of 10 mu m, an interval of 10 mu m, and a depth of 10 mu m. An AlN buffer layer (2) with a thickness of about 40 nm is formed mainly on the top and bottom surfaces of a step on the substrate (1). A GaN layer (3) is formed by vertical and horizontal epitaxial growth. Thus the step is covered by the buffer layer (21) grown on the top surface of the step by horizontal epitaxy, and therefore the surface is planarized. The threading dislocations in the portion of the GaN layer (3) above the bottom of the step are significantly suppressed compared with the portion thereof above the top of the step.