The Guernsey squash star beat England’s Nathan Lake in straight games in the first round.
But he could not get past Egyptian sixth seed Marwan ElShorbagy as the world number five took their second round clash in four, 11-9, 11-7, 8-11, 11-6.
Simpson has dropped to 44 in the world, from a career high of 20, after missing much of 2017 following hip surgery.
He heads to New York next for the Tournament of Champions from 18-25 January 2018.