The third-seeded 26-year-old Argentine defeated Nishioka in a tense three-setter, reports Efe news.
Schwartzman won the opening set 6-1, with Nishioka making a big comeback in the second set, taking it 6-3.
The Argentine, who played his first match of the tournament on Wednesday, defeating Guillermo Garcia-Lopez 6-2, 6-3, took the third set 7-6 after a tie-break.
Nishioka had knocked out Andrey Rublev in straight sets to make it to the quarterfinals.
The Sydney International is hosting some of the world's biggest tennis stars prior to the first Grand Slam of the year, the Australian Open, which will run from January 14 to 27.
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