Stator permanent magnet electrical machine (SPMEM) is widely used in the flywheel energy storage system (FESS) due to its merits of high rotor strength and superior heat-resisting ability. Unfortunately, the SPMEMs suffer from a high PM eddy-current loss (PM-ECL) for its high-speed operation condition in FESS, which would cause PM overheat, and even lead to irreversible PM demagnetization. To address this issue, a new PM segment method, namely, PM circumferential segmentation, is proposed for the SPMEM. First, the topology of the SPMEM is introduced and the corresponding analytical expression of the PM-ECL is derived for unveiling its generation mechanism. Then, the PM circumferential segmentation method is proposed for suppressing the PM-ECL and its optimal numbers of segmentation is investigated. Finally, the FEA is conducted for verification, and the analysis results reveal that the PM circumferential segmentation exhibits a prefer suppression effect of the PM-ECL, which verify the effectiveness and superiority of the PM circumferential segmentation method proposed in the paper.