Permanent-magnet synchronous machines (PMSM) are gaining a foothold in a growing number of applications. However, the high cost of these machines compared with the prices of induction motors, whose production process is mature and material costs are low, limits the use of PMSMs with rare-earth permanent magnets in many potential cases. A viable design solution for a PMSM cost reduction is to use low-cost ferrite magnets instead of rare-earth ones. Nevertheless, it is challenging to apply ferrite magnets to a high-power rotor surface magnet PMSM because of their weaker magnetic properties compared with the rare-earth magnets and the risk of irreversible demagnetization. This paper aims to investigate the boundaries and limiting factors for achieving the maximum tangential stress and linear current density at a certain air gap diameter by using rotor surface ferrite magnets. The computed results are validated by a prototype, which was designed within the described boundaries.