The dynamic characteristics of a built-in motor type air spindle system can be improved by the reduction of mass of squirrel cage rotor because the critical whirling vibration frequency of a high speed air spindle system is highly dependent on the rotor mass of motor and the spindle specific bending modulus. In this paper the rotor of an AC induction motor was manufactured using magnetic powder containing epoxy composite whose density is half of conventional metal rotor and the motor shaft was made of high modulus carbon fiber epoxy composite material. In order to enhance the magnetic flux of the composite squirrel cage rotor of the motor, a steel core was inserted into the composite rotor. The magnetic behavior of composite squirrel cage rotor was analyzed with respect to shapes and positions of the conductor bars and the steel core of the rotor, and the optimal configuration for the dynamic performance of the rotor system was proposed. (C) 2002 Elsevier Science Ltd. All rights reserved.