A semiconductor module structure and a method of forming the semiconductor module structure are disclosed. The structure incorporates a die mounted on a substrate and covered by a lid. A thermal compound is disposed within a thermal gap between the die and the lid. A barrier around the periphery of the die extends between the lid and the substrate, contains the thermal compound, and flexes in response to expansion and contraction of both the substrate and the lid during cycling of the semiconductor module. More particularly, either the barrier is formed of a flexible material or has a flexible connection to the substrate and/or to the lid. The barrier effectively contains the thermal compound between the die and the lid and, thereby, provides acceptable and controlled coverage of the thermal compound over the die for heat removal.