Method of forming thin oxidation layer by cluster ion beam

A method of forming a thin-film magnetic element, such as a TMR element or a spin valve element, on a substrate wherein at least a surface portion of a nonmagnetic metal layer is oxidized by cluster ion beam (CIB) oxidation. Specifically, the method comprises depositing a first magnetic layer on a substrate, then depositing a nonmagnetic metal layer on the first magnetic layer. At least a top surface of the nonmagnetic layer is oxidized by CIB oxidation. In one embodiment, only a top surface portion is oxidized such that a nano-oxide layer (NOL) is formed on a nonmagnetic conductive layer. In another embodiment, the nonmagnetic metal layer is oxidized throughout it's thickness such that the layer is converted to a nonmagnetic insulating film. After oxidation, a second magnetic layer is deposited on the oxidized layer. Oxidizing by cluster ion beam oxidation advantageously comprises mixing a pressurized inert carrier gas with oxygen gas to form a gas mixture and passing the gas mixture into a low pressure vacuum to produce a supersonic gas jet, whereby expansion occurs in the jet to cause formation of clusters of inert gas and oxygen atoms and molecules. The clusters are then ionized and focused into a cluster ion beam and accelerated toward the top surface of the nonmagnetic metal layer to bombard the top surface and react the ionized oxygen atoms and molecules with at least the top surface of the nonmagnetic metal layer.