A method of manufacturing a semiconductor layer includes preparing a first semiconductor substrate; forming an etching stop layer on the surface of the first substrate; forming an active layer on the etching stop layer; forming a crystal defect reducing layer on the active layer; preparing a second semiconductor substrate having a heat conductivity higher than the heat conductivity of the first substrate; bonding the crystal defect reducing layer to the second substrate; selectively etching the first substrate to expose the etching stop layer; selectively etching the etching stop layer to expose the active layer, whereby the active layer is disposed on the second substrate with the crystal defect reducing layer therebetween. The heat dissipation property is significantly improved by the second substrate having a high heat conductivity and by reducing the thicknesses of the active layer and the crystal defect reducing layer. In addition, good crystallinity of the active layer and sufficient mechanical strength of the substrate are obtained.