Integrated circuit packaging system with collapsed multi-integration package and method of manufacture thereof

A method of manufacture of an integrated circuit packaging system comprising:

• providing a base substrate;
• mounting a central integrated circuit over the base substrate;
• mounting a side package having side package substrate along a peripheral region of the base substrate and laterally peripheral to the central integrated circuit with the side package substrate coplanar and in direct contact with the central integrated circuit;
• forming a first vertical connector above the central integrated circuit;
• forming a second vertical connector over the side package substrate, wherein the first vertical connector and the second vertical connector are coplanar;
• and
• encapsulating the central integrated circuit and the side package above the base substrate with a base encapsulation to form a planar surface over the central integrated circuit and the side package facing away from the base substrate, the base encapsulation operable to partially encapsulate the first vertical connector and the second vertical connector such that the first vertical connector and the second vertical connector are exposed in the planar surface.