A transistor includes a stack of III-nitride semiconductor layers, the stack having a frontside and a backside, a source electrode in contact with the frontside of the stack, a drain electrode in contact with the backside of the stack, a trench extending through a portion of the stack, the trench having a sidewall, and a gate structure formed in the trench, including an AlN layer formed on the sidewall of the trench, an insulating cap layer formed on the AlN layer, and a gate electrode formed on the insulator cap layer and covering the sidewall of the trench.