A semiconductor device comprises a first conductive layer formed on a carrier over an insulating layer. A portion of the insulating layer is removed prior to forming the first conductive layer. A first semiconductor die is disposed over the first conductive layer. A discrete electrical component is disposed over the first conductive layer adjacent to the first semiconductor die. A first encapsulant is deposited over the first conductive layer and first semiconductor layer. A conductive pillar is formed through the first encapsulant between the first conductive layer and second conductive layer. A second encapsulant is deposited around the first encapsulant, first conductive layer, and first semiconductor die. A second conductive layer is formed over the first semiconductor die, first encapsulant, and second encapsulant opposite the first conductive layer. The carrier is removed after forming the second conductive layer. A semiconductor package is mounted to the first conductive layer.