A two-step gate-recess process combining high selective wet-etching and non-selective digital wet-etching techniques has been proposed for InAlAs/InGaAs InP-based high electron mobility transistors (HEMTs). High etching-selectivity ratio of InGaAs to InAlAs material larger than 100 is achieved by using mixture solution of succinic acid and hydrogen peroxide (H2O2). Selective wet-etching is validated in the gate-recess process of InAlAs/InGaAs InP-based HEMTs, which proceeds and auto-matically stops at the InAlAs barrier layer. The non-selective digital wet-etching process is developed using a separately controlled oxidation/de-oxidation technique, and during each digital etching cycle 1.2 nm InAlAs material is removed. The two-step gate-recess etching technique has been successfully incorporated into device fabrication. Digital wet-etching is repeated for two cycles with about 3 nm InAlAs barrier layer being etched off. InP-based HEMTs have demonstrated superior extrinsic trans-conductance and RF characteristics to devices fabricated during only the selective gate-recess etching process because of the smaller gate to channel distance.