A semiconductor device has a first semiconductor wafer mounted to a carrier. A second semiconductor wafer is mounted to the first semiconductor wafer. The first and second semiconductor wafers are singulated to separate stacked first and second semiconductor die. A peripheral region between the stacked semiconductor die is expanded. A conductive layer is formed over the carrier between the stacked semiconductor die. Alternatively, a conductive via is formed partially through the carrier. A bond wire is formed between contact pads on the second semiconductor die and the conductive layer or conductive via. An encapsulant is deposited over the stacked semiconductor die, bond wire, and carrier. The carrier is removed to expose the conductive layer or conductive via and contact pads on the first semiconductor die. Bumps are formed directly on the conductive layer and contact pads on the first semiconductor die.