The utility back moves to fullback for the match against the Sunwolves in Tokyo, as Smith takes his second rest week of the season in line with All Black protocols this season.
His move creates a reshuffle in the ever-changing backline.
Sio Tomkinson pushes out one spot to fill Faddes' spot on the right wing.
Rob Thompson comes in to start at centre, while Aaron Smith returns fully from injury to start at halfback.
In the forwards Luke Whitelock will captain the side and slots in at blindside flanker for Shannon Frizell.
It is the only switch in an otherwise unchanged forward pack.
Highlanders team to play Sunwolves
Matt Faddes, Sio Tomkinson, Rob Thompson, Tei Walden, Tevita Li, Josh Ioane, Aaron Smith, Elliot Dixon, James Lentjes, Luke Whitelock, Tom Franklin, Jackson Hemopo, Tyrel Lomax, Liam Coltman, Daniel Lienert-Brown. Reserves: Ash Dixon, Sef Fa'agase, Siate Tokolahi, Josh Dickson, Shannon Frizell, Kayne Hammington, Bryn Gatland, Dillon Hunt.