A semiconductor device has a semiconductor die with a die bump pad. A substrate has a conductive trace with an interconnect site. A conductive bump material is deposited on the interconnect site or die bump pad. The semiconductor die is mounted over the substrate so that the bump material is disposed between the die bump pad and interconnect site. The bump material is reflowed without a solder mask around the die bump pad or interconnect site to form an interconnect structure between the die and substrate. The bump material is self-confined within the die bump pad or interconnect site. The volume of bump material is selected so that a surface tension maintains self-confinement of the bump material substantially within a footprint of the die bump pad and interconnect site. The interconnect structure can have a fusible portion and non-fusible portion. An encapsulant is deposited between the die and substrate.