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)
Secondly, upgrading your Fab to switch your process to larger wafer size has a 10-figure $ price tag. It's not trivial for digital, let alone opto electronics. LEDs are special in that they deviate severely from the standard mos process. When Monsanto first produced them they almost dumped the idea for LEDs because of all the issues to deal with the exotic materials.
I don't understand this. Given a fixed size die, the number of dies near the edge would go up linearly as the wafer size goes up. The number of interior dies would go up quadratically.