Earlier quoted context omitted.
Same as regular chips: in a grid on a wafer, then cut and pick&placed. Don't forget: yield goes up when the die shrinks because the defects are typically small spots. The smaller the die the better you pixelate the defects. The wafers are only 2 inch diameter to avoid yield loss due to edge effects: at the edge of the wafer you have lowest quality components (optical ring effects)
I doubt that they 2-inch wafers to avoid yield loss from edge effects. The ratio of area to perimeter rises as you increase the wafer size. Perhaps the reasons they use 2-inch wafers are for better uniformity, better flexibility, or lower capital investment.
Probably uniformity & capital. The profit margins on LED aren't what they used to be.