The eight-seeded failed to capitalise on his opening game win and lost 18-21, 21-14, 21-19 in a thrilling last-eight contest that lasted about an hour.
Earlier, Srikanth had trounced compatriots Ajay Jayaram and Parupalli Kashyap to progress through to the quarters in the men's singles event.
Image: Kidambi Srikanth
Photograph: Warren Little/Getty Images for Falcon