A method of manufacture of an integrated circuit packaging system includes: providing a substrate external layer having an opening; forming a convex interconnect within the opening with the convex interconnect having a protrusion and a horizontal flange substantially horizontally coplanar with the substrate external layer; forming an insulation layer over the substrate external layer and the convex interconnect; forming a horizontal conductive pathway on the insulation layer; forming a single interlayer conductive connector from the horizontal conductive pathway to the convex interconnect; and connecting an integrated circuit and the horizontal conductive pathway.