InGaAs/InAlAs modulation-doped field-effect transistors (MODFETs) grown by molecular beam epitaxy on InP have been characterized using Hall and cross-sectional scanning tunneling microscopy (XSTM). Spacer layer to quantum well interface XSTM images will be presented showing cluster sizes ranging from 20 to 50 Angstrom for normal growth conditions. The extent of the clustering experimentally found is greater than that predicted by theory for phase separation due to kinetics or bulk thermodynamics. The extent of clustering was not found to be a function of growth temperature while the morphology and cluster orientation was a function of growth temperature. At normal growth temperatures, the clusters tended to self align into binary corridors. Control (and removal) of these binary corridors allowed the growth and fabrication of MODFETs with Schottky barrier heights greater than 1 eV.