A semiconductor device has a flipchip or PoP semiconductor die mounted to a die attach area interior to a substrate. The substrate has a contact pad area around the die attach area and flow control area between the die attach area and contact pad area. A first channel is formed in a surface of the substrate within the flow control area. The first channel extends around a periphery of the die attach area. A first dam material is formed adjacent to the first channel within the flow control area. An underfill material is deposited between the die and substrate. The first channel and first dam material control outward flow of the underfill material to prevent excess underfill material from covering the contact pad area. A second channel can be formed adjacent to the first dam material. A second dam material can be formed adjacent to the first channel.