World No.2 Ruud lost 6-2 3-6 6-2 in Seoul on Friday as the Norwegian found the going too tough in his first tournament in Asia for three years.
Ranked No.56 before this week, Nishioka is one win away from vaulting back into the top 50, potentially going beyond his highest ranking of No.48 if he reaches the final.
He said: "I feel great. My motivation is very high. I am playing very well, very smart."
Assessing top seed Ruud, Nishioka said: "I know he came from Europe and played at the Laver Cup, which is not easy matches. He wasn't settled on this court or this country yet, maybe. I was ready. I was focused on playing against him and I had a plan and it worked."
Nishioka had an outstanding run to the Washington final in August, before losing out to Nick Kyrgios in the title match. That was a major outlier in his season, which has consisted largely of early-round defeats.
His semi-final opponent will be American Aleksandar Kovacevic, a 24-year-old world No.222 who is enjoying the biggest week of his career. A 'lucky loser', handed his place in the draw when a spot opened up, Kovacevic has taken full advantage and beat compatriot Mackenzie McDonald 4-6 6-3 6-2 in their last-eight battle.
Canadian Denis Shapovalov, still seeking a first final appearance of the year, moved one step away by beating Moldova's Radu Albot 6-2 6-2, setting up a clash with American Jenson Brooksby, who was handed a bye because of Cameron Norrie pulling out with illness.