The 29-year-old Olympic bronze medallist and world number nine lost 16-21, 23-21, 4-21 to her 19-year-old opponent in the women's singles match that lasted one hour and seven minutes.
Nehwal, seeded second, will begin her quest for the second title this year when she will take on China's Wang Zhiyi in the first round of the women's singles.
The 25-year-old Sai Praneeth was the lone Indian left in fray in the tournament after he entered the semifinals of the men's singles event on Friday.
Praneeth will next face second seed Jonatan Christie of Indonesia in the semifinals.
New Delhi: The Indian challenge in New Zealand Open badminton in Auckland ended Friday with fifth seed Arvind Bhat losing in straight games to top seed Jen Hao Hsu of Chinese Taipei in the semi-finals
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