The invention provides an LED 
chip capable of improving external 
quantum efficiency. The LED 
chip comprises a DBR layer, a substrate, a buffer layer, a first 
semiconductor layer, an 
active layer, a second 
semiconductor layer, a transparent conductive layer, an N type 
electrode and a P type 
electrode, wherein the N type 
electrode and the P type electrode are both aluminum-based reflection electrodes, and the 
aluminum metal layer of the P type electrode is in direct contact with the transparent conductive layer to improve the 
reflectivity of a reflection electrode and a 
semiconductor interface.The invention further provides a preparation method of the LED 
chip capable of improving the external 
quantum efficiency. The method comprises the following steps: growing a complete LED structure epitaxial 
wafer on a substrate, and 
etching to form a 
semiconductor structure with a step inclined plane; manufacturing a current 
blocking layer and a transparent conductive layer comprising an AZO layer; preparing a P type electrode, an N type electrode and a 
passivation layer, and performing back plating of a DBR layer; and preparing the 
wafer into the LED chip device. According to the invention, the aluminum-based reflecting electrode is adopted, and the 
insertion layer 
metal between the P type electrode and the transparent conductive layer is canceled, so that the luminous efficiency of the LED chip is improved, and the external 
quantum efficiency of the LED chip is improved.