An oxide film is formed by STI in a silicon surface region in which a substrate potential heavily doped diffusion layer and a source heavily doped diffusion layer are to be provided later between trenches at predetermined intervals. The oxide film is removed after the trench is formed, to thereby form a region which is lower than a surrounding surface. Thus, in the vertical MOS transistor having a trench structure which includes a side spacer, a silicide on a gate electrode embedded in the trench and a silicide on the substrate potential heavily doped diffusion layer and the source heavily doped diffusion layer can be separated from each other.