Dry etch of wafer-bonded AlGaInP/mirror/Si light-emitting diodes (LEDs) with planar electrodes was performed by high-density plasma using an inductively coupled plasma (ICP) etcher. The etching characteristics were investigated by varying process parameters such as Cl-2/N-2 gas combination, chamber pressure, ICP power and substrate-bias power. The corresponding plasma properties (ion flux and dc bias), in situ measured by a Langmuir probe, show a strong relationship to the etch results. With a moderate etch rate of 1.3 mum/min, a near vertical and smooth sidewall profile can be achieved under a Cl-2/(Cl-2+N-2) gas mixture of 0.5, ICP power of 800 W, substrate-bias power of 100 W, and chamber pressure of 0.67 Pa. Quantitative analysis of the plasma-induced damage was attempted to provide a means to study the mechanism of leakage current and brightness with various dc bias voltages (-110 to -328 V) and plasma duration (3-5 min) on the wafer-bonded LEDs. It is found that the reverse leakage current increases and the brightness decreases rapidly as the dc bias increases, which is a clear indication of severe damage accumulation in the sidewall. However, once a low-etch-rate condition (long duration of plasma treatment) is chosen to facilitate smooth sidewall and profile, the accumulated charge on the etched surface may not have enough time to relieve and make the leakage current increase. Finally, an effective recovery method is developed, where the plasma-induced damage can be partially restored after rapid thermal annealing at 450 degreesC in N-2 ambience.