Integrated circuit packaging system with trace protection layer and method of manufacture thereof

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

• providing a pre-plated leadframe having a contact protrusion, a protective pad on the contact protrusion, and bond structures opposite the protective pad;
• connecting an integrated circuit die to the bond structures;
• depositing an encapsulation on the integrated circuit die and the bond structures of the pre-plated leadframe;
• forming a contact pad and traces by etching the pre-plated leadframe;
• applying a trace protection layer on the contact pad, the traces, and the protective pad;
• removing the protective pad and a portion of the trace protection layer for exposing the contact pad using a backgrinding tool;
• forming a recess in the trace protection layer by etching the surface of the contact pad to a recess distance from an exposed surface of the trace protection layer the surface of the contact pad only exposed in the recess;
• and
• depositing an external connector directly on a surface of the contact pad.

An integrated circuit packaging system comprising:

• an integrated circuit die;
• a contact pad connected to the integrated circuit die;
• traces connected to the contact pad;
• a trace protection layer on the contact pad and the traces, the trace protection layer having a recess with an external surface of the contact pad only exposed in the recess and the contact pad spaced a recess distance away from an exposed surface of the trace protection layer;
• and
• an external connector directly on the external surface of the contact pad.