Before a semiconductor die of a brittle III-V compound semiconductor is encapsulated with a molding compound during package fabrication, side surfaces of the semiconductor die are treated to avoid or prevent surface imperfections from propagating and fracturing the crystal structure of the substrate of the III-V compound semiconductor under the stresses applied as the molding compound solidifies. Surfaces are treated to form a passivation layer, which may be a passivated layer of the substrate or a passivation material on the substrate. In a passivated layer, imperfections of an external layer are transformed to be less susceptible to fracture. Passivation material, such as a poly-crystalline layer on the substrate surface, diffuses stresses that are applied by the molding compound. Semiconductor dies in flip-chip and wire-bond chip packages with treated side surfaces as disclosed have a reduced incidence of failure caused by die fracturing.