Microdefects originating from impurity-dislocation interactions in undoped InP that had been annealed in phosphorus and iron phosphide ambiances have been studied using optical microscopy. The electrical uniformity of the annealed wafer is improved by removing impurity aggregation around dislocations and by eliminating impurity striations in the annealing process. Compared to as-grown Fe-doped semi-insulating (SI) material, SI wafers obtained by annealing undoped InP in iron phosphide ambiances have better uniformity. This is attributed to the avoidance of Fe aggregation around dislocations and dislocation clusters, Fe precipitation and impurity striations, and is related to the use of a low concentration of Fe in the annealed material. The influence of Fe diffusion on the migration of dislocations in the annealing process has been studied and reviewed. (C) 2003 Elsevier B.V. All rights reserved.