Abstract: A magnetic encoder apparatus comprising a housing is disclosed in the present invention. The housing includes a base portion and a cover plate portion. The housing also comprises a magnet that is contained in the base portion of the housing, a sensor chip having a major surface located adjacent to the magnet, and an alignment spacer comprising a first side and a second side. The first side of the alignment spacer having an opening through to the second side of the alignment spacer, and the second side fitting into the base portion of the housing. The opening of the alignment spacer encloses the sensor chip.