A concave portion corresponding to the reading track width is formed in the surface of a bottom shield layer so that a step is formed in an insulating layer (bottom shield gap film) between the region where an AMR element is formed and the region where a lead electrode layer is formed. Thereby, the lead electrode layer can be made thicker. At the same time, a step on a top shield layer side can be suppressed even if the lead electrode layer is formed thick. Also, height of a photoresist pattern used for lift-off can be decreased so that the reading track width can be made narrow.