Morning starter Schmid made eight birdies before dropping his only shot of the day at the ninth - his closing hole - in a superb 64 which moved him to eight under par.
It was a tale of two nines for Horsfield - who, like Whitnell began the day in a three-way tie at the top of the leaderboard - as the 25-year-old made three bogeys and a single birdie on the front side before coming home in 31 to sign for a 69.
Whitnell, meanwhile, completed his round with a birdie at the ninth to join Schmid and Horsfield at the summit, as he also shot a second-round 69.
England's Richard Mansell and Portugal's Ricardo Santos sat another shot back in a tie for fourth.
German Schmid began the day five shots off the lead but soon set about closing the gap as, starting from the tenth tee, he got his first birdie of the day at the 11th before holing a monster birdie putt from almost 50 feet at the short 12th.
Another lengthy birdie putt followed at the 14th and he picked up his fourth birdie at the 16th.
He continued to make good progress after the turn with birdies on the second, third and fifth.
And another sensational long putt - this one coming from 30 feet - on the eighth briefly took him to nine under before a bogey at the ninth saw him sign for a 64.
“I holed a few nice putts, gave myself looks and holed the putts," said Schmid.
“I was happy with everything to be honest. I hit the ball well, hit a lot of nice wedges which is what you have to do out here and was able to make some putts today."
First-round co-leader Horsfield made a slow start on Friday, with a birdie at the third the only bright spot in a front-nine 38 which contained three bogeys.
But he got his round back on track after the turn, with a birdie at the 11th steadying the ship before a hat-trick of gains at the 14th, 15th and 16th handed him a share of first place.
A remarkable par save followed after he got into trouble at the 17th and he went agonisingly close to taking the outright lead but his long birdie putt on the 18th green narrowly avoided the hole.
Horsfield said: "I actually felt like I played pretty good on the front nine, I just felt like I had a few bad breaks and caught maybe the biggest flyer I have ever caught in my life on nine, and then yeah, kept playing solid golf.
"I made three in a row on the back nine and it was just nice to see some putts go in and have some opportunities.
“I’m looking forward to (the weekend). Every time you are in contention I think it’s always a good thing and I think I’ll just try to go out there tomorrow and do the same stuff I did out there on the back nine today and go from there.”
Starting from the tenth, Whitnell made birdies at the 11th and fourth before dropping his only shot of the day at the long fifth.
He bounced back with a closing birdie from 12 feet at the ninth to get to eight under.
“It was really solid to be honest," said Whitnell. "I made one bogey and it was a bit of an error on my part, tried to be a bit greedy out of the fairway trap on the par five, but it was great to finish with a birdie on nine because that was a tough hole today.
"It’s playing a lot tougher today than it was yesterday for us being out in the afternoon and firming up, the wind was up, so yeah it was tricky.
“I feel as if I know that when I get into contention I can do the job in hand, I just have to keep hold of my emotions and keep playing golf I guess.”
Lev Grinberg's dream DP World Tour debut will continue into the weekend as the 14-year-old amateur comfortably made the cut after adding a second-round 69 to the 70 he shot on his home course on Thursday.
He said: "I played amazing! I can’t wait to play tomorrow and Sunday. It’s so nice to play good and make the cut on my home course, and hopefully grind out as many birdies as I can and hopefully get top ten, that is my goal this weekend."