A semiconductor device has a substrate including a base substrate material and a plurality of conductive vias formed partially though the substrate. A plurality of semiconductor die including a base semiconductor material is disposed over the substrate. A ratio of an encapsulant to a quantity of the semiconductor die is determined for providing structural support for the semiconductor die. An encapsulant is deposited over the semiconductor die and substrate. An amount of the encapsulant is selected based on the determined ratio or based on a total amount of the base substrate material and base semiconductor material. Channels are formed in the encapsulant by removing a portion of the encapsulant in a peripheral region of the semiconductor die. Alternatively, a side surface of the semiconductor die is partially exposed with respect to the encapsulant. A portion of the base substrate material is removed to expose the conductive vias.