In a method of manufacturing a semiconductor device including a non-volatile memory formed in a memory cell area and a logic circuit formed in a peripheral area, a mask layer is formed over a substrate in the memory cell area and the peripheral area. A resist mask is formed over the peripheral area. The mask layer in the memory cell area is patterned by using the resist mask as an etching mask. The substrate is etched in the memory cell area. After etching the substrate, a memory cell structure in the memory cell area and a gate structure for the logic circuit are formed. A dielectric layer is formed to cover the memory cell structure and the gate structure. A planarization operation is performed on the dielectric layer. An upper portion of the memory cell structure is planarized during the planarization operation.