Having started the day at nine-under and a stroke behind overnight leader Jason Scrivener, the reigning British Open champion had moved to 13-under after four birdies on his first eight holes.
Smith had birdied the second and then put his approach to the par-three fourth within a metre of the flag.
The two-time Australian PGA winner then birdied the sixth and seventh holes to build a four-shot lead before making bogey on the par-five, 562m ninth hole, which he bogeyed after an errant drive. Smith recovered to the fairway, put his third shot into a deep greenside bunker and then missed his putt for par.
In contrast, Scrivener went backwards on the opening nine holes, with three bogies.
Smith came back to the pack slightly with bogies at 11 and 12, as well as a closing bogey on 18, but also had birdies on 15 and 16 to card a two-under 69 – the eighth-best round of the day.
Smith is at 11-under, with Liu Yanwei (70) of China and Masahiro Kawamura (71) of Japan tied for second at eight-under. Four others, including Australians Min Woo Lee (68) and Scrivener (74) were at seven-under and four behind Smith.
- With AP