Nadal, seeded second in the event, was knocked out in straight sets by Mikhail Youzhny, 7-6 (7-5), 6-3. Youzhny, who won last week's tournament in The Netherlands, owns an eight-match winning streak.
But the longest current win streak belongs to world No. 1 Roger Federer who notched his 39th consecutive win in a 6-3, 6-7 (6-8), 6-3 decision over seventh-seeded Novak Djokovic. Federer has won the Dubai event three times in the last five years and was runner-up to Nadal last year.
Friday's semifinals send Federer against Haas and Soderling versus Youzhny.
The tournament champion will collect $300,000.
Notable deaths of 2014 [PHOTOS]