A semiconductor device has a first substrate. A first semiconductor component and second semiconductor component are disposed on the first substrate. In some embodiments, a recess is formed in the first substrate, and the first semiconductor component is disposed on the recess of the first substrate. A second substrate has an opening formed through the second substrate. A third semiconductor component is disposed on the second substrate. The second substrate is disposed over the first substrate and second semiconductor component. The first semiconductor component extends through the opening. An encapsulant is deposited over the first substrate and second substrate.