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Williams and Barty ground out tough wins at the Yarra Valley Classic, but a teary-eyed Australian Open champion Sofia Kenin lost a repeat of last year's final against Garbine Muguruza in straight sets.
Williams, 39, has been in ominous form but needed to overcome a mid-match wobble to oust fellow American Collins 6-2, 4-6, 10-6 in 96 minutes.
"I have nothing to lose against her... it's going to be a good match," Williams said about Saturday's contest with Barty.
The 23-time Grand Slam champion broke three times in a dominant first set and appeared to be cruising until unexpectedly dropping her serve in the seventh game, as Collins forced a super tiebreaker.
Williams, aiming for a record-equalling 24th Grand Slam title at the Australian Open, regrouped and finished the match by hitting her 24th winner.
Six build-up tournaments for next week's Australian Open have returned to action after a coronavirus case at a designated tournament hotel halted play Thursday and forced hundreds of players and officials into isolation.
Storms forecast for Friday threatened to increase the backlog, but to ease the congestion WTA clashes were reduced to two sets and a 10-point super tiebreaker instead of the traditional three sets.
World number 15 Muguruza has been in aggressive form in Melbourne, dropping just four games in two matches prior, and impressively hit the lines to run Kenin ragged 6-2, 6-2.
"It's always better to know that you've played well here... and this is definitely the Happy Slam," said the Spaniard, using the Australian Open's nickname.
The two-time Grand Slam champion is showing the form that saw her rise to the top of the rankings in 2017 but it's a different story for defending Australian Open champion Kenin.
The 22 year-old's return to the scene of her stunning breakthrough last year has been rocky, after playing just one set in her opener against Camila Giorgi, who retired hurt, and then surviving a three-set scare against fellow American Jessica Pegula.
Her struggles continued with 28 unforced errors as the flummoxed American departed in tears.
Earlier Barty, who has yet to rediscover her best after a long layoff, prevailed 7-5, 2-6, 10-4 in 92 minutes to reach a much-anticipated Yarra Valley Classic semi-final.
"I always love testing myself against Serena. Looking forward to it tomorrow," she said.
The 24 year-old Barty, competing in her first tournament in 11 months, appeared fresh after Thursday's unexpected stoppage having played two singles matches within 20 hours earlier in the week.
Barty, playing with the roof shut on Margaret Court Arena, overcame a second-set stutter with a ruthless performance in the super tiebreaker.
Two-time Australian Open champion Victoria Azarenka saved two match points to beat Yulia Putintseva 6-4, 1-6, 11-9 and move into the quarter-finals of the Grampians Trophy in her season debut.
Naomi Osaka and Simona Halep also play later.