A method for fabricating a magnetic film structure is provided. The method comprises forming a magnetic structure on a bottom electrode layer, the magnetic structure comprising at least one pinned bottom magnetic film layer having a fixed magnetic orientation; at least one top magnetic film layer whose magnetic orientation can be manipulated by a current; and a tunneling layer between the bottom magnetic film layer and the top magnetic film layer; forming a metallic hard mask atop the magnetic structure; patterning and etching the metallic hard mask to define exposed areas of the magnetic structure; selectively etching the exposed areas of the magnetic structure by a chemical etch process based on a CO etch chemistry to form discrete magnetic bits.