This paper presents fabrication techniques of the optical fiber position sensor (or spindle state monitoring. These include selection of components such as optical fibers, a laser-diode, a photo-diode, and op-amp IC of the signal process circuit. We also describe electric runout problem. The fabricated sensor has a linearity of $1.7\%$ FSO in the air gap range $0.1~0.6mm$, a resolution of $0.37{mu}m$ and a bandwidth of 6.3kHz. Finally, we have successfully operated a magnetic bearing spindle system using the sensors.