A semiconductor device has a base substrate with recesses formed in a first surface of the base substrate. A first conductive layer is formed over the first surface and into the recesses. A second conductive layer is formed over a second surface of the base substrate. A first semiconductor die is mounted to the base substrate with bumps partially disposed within the recesses over the first conductive layer. A second semiconductor die is mounted to the first semiconductor die. Bond wires are formed between the second semiconductor die and the first conductive layer over the first surface of the base substrate. An encapsulant is deposited over the first and second semiconductor die and base substrate. A portion of the base substrate is removed from the second surface between the second conductive layer down to the recesses to form electrically isolated base leads for the bumps and bond wires.