In a method for manufacturing a semiconductor device, a first semiconductor layer is formed over substrate. An etching stop layer is formed over the first semiconductor layer. A dummy layer is formed over the etching stop layer. Isolation regions are formed in the dummy layer, the etching stop layer and the first semiconductor layer. The dummy layer and the etching stop layer between the isolation regions are removed to form a space. The first semiconductor layer is exposed in the space. A second semiconductor layer is formed over the first semiconductor layer in the space. A third semiconductor layer is formed over the second semiconductor layer in the space. The isolation regions are recessed so that an upper portion of the third semiconductor layer is exposed.