A semiconductor device has a plurality of similar sized semiconductor die each with a plurality of bond pads formed over a surface of the semiconductor die. An insulating layer is formed around a periphery of each semiconductor die. A plurality of conductive THVs is formed through the insulating layer. A plurality of conductive traces is formed over the surface of the semiconductor die electrically connected between the bond pads and conductive THVs. The semiconductor die are stacked to electrically connect the conductive THVs between adjacent semiconductor die. The stacked semiconductor die are mounted within an integrated cavity of a substrate or leadframe structure. An encapsulant is deposited over the substrate or leadframe structure and the semiconductor die. A thermally conductive lid is formed over a surface of the substrate or leadframe structure. The stacked semiconductor die are attached to the thermally conductive lid.