The 26-year-old lay prone on the court floor for nearly 10 minutes with a gashed chin, blood pouring down his neck, with the men’s doubles clash against top seeds Japan locked at 19-19 in the deciding game.
Teo suffered the injury after he and playing partner Ong Yew Sin both dived in an attempt to retrieve the same shot, and Ong’s trailing left leg caught Teo in the face.
Although Teo eventually climbed off the floor to continue with a large bandage on his chin, the Malaysian duo appeared to have lost their edge.
They saved a second match point against Takeshi Kamura and Keigo Sonoda, but could not ultimately prevent going down to a dramatic defeat spread over 95 thrilling minutes.
Teo afterwards refused to blame the attritional three-game loss on the injury, but said: “It’s quite a big cut and I think it’s going to need stitches.”
The painful defeat put Japan 1-0 up in the tie in the Chinese city of Nanning and on the way to a semi-finals meeting with Indonesia.
Indonesia booked their place in the last four with a narrow 3-2 win over Taiwan.
Saturday’s other semi-final is between the hosts China, who are the hot favourites to win the mixed-team world championship for an 11th time, and Thailand.