A semiconductor device has a plurality of conductive vias formed into a semiconductor wafer. A portion of the semiconductor wafer is removed so the conductive vias extend above a surface of the semiconductor wafer. A notch is formed in the semiconductor wafer around each of the conductive vias. The notch around the conductive vias can be formed by wet etching, dry etching, or LDA. A first insulating layer is formed over a surface of the semiconductor wafer and conductive vias and into the notch to provide stress relief between the conductive vias and semiconductor wafer. A portion of the first insulating layer is removed to expose the conductive vias. A first conductive layer and second insulating layer can be formed around the conductive vias. A second conductive layer can be formed over the conductive vias. The notch can extend into the second insulating layer.