Semiconductor Device and Method of Forming SIP with Electrical Component Terminals Extending Out from Encapsulant

A semiconductor device has a carrier with an adhesive layer formed over the carrier. Alignment marks are provided for picking and placing the electrical component on the carrier or adhesive layer. An electrical component is disposed on the adhesive layer by pressing terminals of the electrical component into the adhesive layer. The electrical component can be a semiconductor die, discrete component, electronic module, and semiconductor package. A leadframe is disposed over the adhesive layer. A shielding layer is formed over the electrical component. An encapsulant is deposited over the electrical component. The carrier and adhesive layer are removed so that the terminals of the electrical component extend out from the encapsulant for electrical interconnect. A substrate includes a plurality of conductive traces. The semiconductor device is disposed on the substrate with the terminals of the electrical component in contact with the conductive traces.