A semiconductor device has a substrate with a plurality of active semiconductor die disposed over a first portion of the substrate and a plurality of non-functional semiconductor die disposed over a second portion of the substrate while leaving a predetermined area of the substrate devoid of the active semiconductor die and non-functional semiconductor die. The predetermined area of the substrate devoid of the active semiconductor die and non-functional semiconductor die includes a central area, checkerboard pattern, linear, or diagonal area of the substrate. The substrate can be a circular shape or rectangular shape. An encapsulant is deposited over the active semiconductor die, non-functional semiconductor die, and substrate. An interconnect structure is formed over the semiconductor die. The absence of active semiconductor die and non-functional semiconductor die from the predetermined areas of the substrate reduces bending stress in that area of the substrate.