The fourth-seeded Indian saved six match points in the second game, but lost the final 21-14, 22-20 to become only the fourth Indian to win a silver medal in the competition.
India's highest-ranked male shuttler in the tournament defeated China's Hu Zhe An in a three-set encounter, 21-18, 8-21, 21-16 in the quarterfinals. Sankar is now assured of a bronze medal.
Unnati Hooda, who won the women's singles title at the Odisha Open in January and went on to become the youngest Indian to win a BWF Super 100 title, will next play Japanese player Hina Akechi in the pre-quarterfinals.