A method includes forming in sequence a bottom magnetic layer, a tunnel barrier layer, a top magnetic layer, and a top electrode layer over a bottom electrode layer; performing a first etching process to recess the top electrode layer, in which the first etching process stops before the top magnetic layer is etched; performing a second etching process to pattern the top electrode layer as a top electrode and the top magnetic layer as a patterned top magnetic layer, in which the second etching process stops before the bottom magnetic layer is etched; forming a first spacer around the top electrode and the patterned top magnetic layer; and after forming the first spacer, performing a third etching process to pattern the tunnel barrier layer as a patterned tunnel barrier layer and the bottom magnetic layer as a patterned bottom magnetic layer.