We report the characterization of GaN high electron mobility transistors (HEMTs) using a new AlN-capped AlInN/GaN epilayer structure developed to achieve high current densities and reduced gate leakage currents. Devices with gate lengths of 75 and 200 nm and various and source-drain separations were fabricated simultaneously, allowing the selection of the most favorable configuration for power performance. We show that, as anticipated, aggressive scaling of source-drain spacing and gatelength does not benefit power performance because of early breakdown and more pronounced short-channel effects. For a non-field-plated 0.2 mu m gate length in a 4 mu m source-drain gap, the new epitaxial structure achieved a power density of 4.5W/mm at 40 GHz. To the best of our knowledge, this is the highest power reported at 40 GHz for AlInN/GaN-based transistors, and the first report of the large-signal performance of an AlN-capped AlInN/GaN-based HEMT. (c) 2013 The Japan Society of Applied Physics