A semiconductor device includes a substrate with conductive traces. A semiconductor die is mounted with an active surface oriented toward the substrate. An underfill material is deposited between the semiconductor die and substrate. A recess is formed in an interior portion of the semiconductor die that extends from a back surface of the semiconductor die opposite the active surface partially through the semiconductor die such that a peripheral portion of the back surface of the semiconductor die is offset with respect to a depth of the recess. A thermal interface material (TIM) is deposited over the semiconductor die and into the recess such that the TIM in the recess is laterally supported by the peripheral portion of the semiconductor die to reduce flow of the TIM away from the semiconductor die. A heat spreader including protrusions is mounted over the semiconductor die and contacts the TIM.