A semiconductor wafer contains a plurality of semiconductor die each having a plurality of contact pads. A sacrificial adhesive is deposited over the contact pads. Alternatively, the sacrificial adhesive is deposited over the carrier. An underfill material can be formed between the contact pads. The semiconductor wafer is singulated to separate the semiconductor die. The semiconductor die is mounted to a temporary carrier such that the sacrificial adhesive is disposed between the contact pads and temporary carrier. An encapsulant is deposited over the semiconductor die and carrier. The carrier and sacrificial adhesive is removed to leave a via over the contact pads. An interconnect structure is formed over the encapsulant. The interconnect structure includes a conductive layer which extends into the via for electrical connection to the contact pads. The semiconductor die is offset from the interconnect structure by a height of the sacrificial adhesive.