A semiconductor device has a first encapsulant deposited over a first carrier. A plurality of conductive vias is formed through the first encapsulant to provide an interconnect substrate. A first semiconductor die is mounted over a second carrier. The interconnect substrate is mounted over the second carrier adjacent to the first semiconductor die. A second semiconductor die is mounted over the second carrier adjacent to the interconnect substrate. A second encapsulant is deposited over the first and second semiconductor die, interconnect substrate, and second carrier. A first interconnect structure is formed over a first surface of the second encapsulant and electrically connected to the conductive vias. A second interconnect structure is formed over a second surface of the second encapsulant and electrically connected to the conductive vias to make the Fo-WLCSP stackable. Additional semiconductor die can be mounted over the first and second semiconductor die in a PoP arrangement.