Eighth seed Robin Soderling remains the only player inside the top 12 to have been eliminated after he lost in the opening round.
The American will now face top seed Paradorn Srichaphan after the Thai player beat wild card Nicolas Kiefer 6-0 6-2 in the other semi-final.
Fourth seed Li, the highest-ranked player left in the competition, will face Magdalena Rybarikova in the final, after the 13th-seeded Slovakian beat Indian Sania Mirza 3-6 6-0 6-3.
Elsewhere at the Foro Italico, rising Polish player Jerzy Janowicz upset eighth seed Jo-Wilfried Tsonga 6-4, 7-6 (5) and celebrated by ripping his shirt apart and tossing the pieces to the crowd.
Djokovic's defeat means second seed Andy Murray is the highest-ranked player left in the draw.
Fifth seed Mariano Zabaleta , the highest-ranked player left, progressed to the quarter-finals with a 6-4 6-4 win over Dutchman Martin Verkerk .
Chardy, who as world number 145 is the lowest-ranked player left in the draw, defeated sixth seed David Nalbandian in the second round and will now play Nicolas Almagro, who beat Andy Murray, for a quarter-finals berth.
Alker profited from the ninth seed's finishing problems to ensure at least one unseeded player will reach the semi-finals at Purfleet.
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Former world No. 1 Caroline Wozniacki continued her decline, as the Danish 10th seed lost 6-2 6-4 to another Kazakh player, Yaroslava Shvedova.
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Monsanto had developed promising seed products following its initial investment, but it was a bit player, struggling to find a foothold in an industry with several well-established competitors.
Carter-Williams did a terrific job of dealing with one thing at a time, so much so that he was chosen as the top player in the East Regional for helping No. 4 seed Syracuse beat No. 1 seed Indiana, then No. 3 seed Marquette, to make it to the Final Four for the first time since winning the 2003 NCAA championship.
Elsewhere, eighth seed Anastasia Myskina lost the first set but fought back to beat Swiss player Emmanuelle Gagliardi 5-7 6-2 6-0.
Roddick, another big server, earned a match-up with Soderling -- who has not dropped a set this week and has beaten the U.S. player in their two meetings --after defeating Spanish 18th seed Tommy Robredo 6-3 7-5.
Murray produced a tenacious performance on Saturday to upset third seed Andy Roddick on Saturday but just two days later, he was a completely different player.
Another home player in fine form was British number two James Ward , who took 10th seed Mardy Fish all the way in a gruelling five-set match.
Raonic, who had never beaten a top-10 player before but finished with 64 winners and 31 aces, will next face seventh seed David Ferrer .
She knocked out top seed Maria Sharapova in Friday's quarterfinals, her first-ever win over a top-10 player.
Ninth seed Ferrer had lost all nine of his previous meetings with Federer but is the most in-form player on the ATP Tour this season, having won 33 matches.
Djokovic, who became the 40th player on the ATP Tour to register 500 career match wins, will next play German 16th seed Phillipp Kohlschreiber as he seeks to improve on last year's final defeat to Nadal.
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