Samsung crisis pitches heir apparent into expanded role
Samsung Electronics heir apparent Lee Jae Yong has been nominated to the board, teeing him up for a bigger role as South Korea's largest company struggles with a widening recall of its Note 7 smartphone.
Lee, better known as Jay Y, has been helping run Samsung since his father suffered a heart attack in 2014.
Now the scion will have to show if he has the mettle to help steer the company through its deepest crisis in years.
Regulators, airlines and Samsung have warned customers to stop using Note 7 phones, plagued by reports that the batteries catch fire while charging. Samsung has lost $22bn (€19.5bn) in market value over two days - suggesting damage to the brand could go well beyond early estimates of $1bn for the phone's recall. Samsung released the Note 7 in late August to get a jump on Apple's new iPhone 7, due in stores later this month.
That advantage has now disappeared.
Jay Y's board nomination "is a signal that Samsung needs strong leadership in the midst of risk and uncertainty", said Park Ju Gun, president of corporate watchdog CEOSCORE in Seoul.
"By showing the markets that he's assuming responsibility, Lee Jae Yong may be seeking to take a step forward in the succession."
Jay Y (48) will become more involved in strategic decision-making, including mergers and acquisitions, the Suwon, South Korea-based company said in a statement yesterday.
Now co-vice chairman, he's expected to be formally elevated to the nine-person board after a shareholder vote in October.
Jay Y has moved through a series of jobs since joining Samsung full time in 2001 and shouldered more responsibility after his father Lee Kun Hee was hospitalised in 2014. Jay Y is considered more globally minded than Lee senior. Samsung's so-called Crown Prince speaks Korean, English and Japanese and has been credited with cutting partnerships with Apple and Google.
Working with the late Apple ceo Steve Jobs, Jay Y agreed to build a new factory making the flash chips Apple wanted instead of the hard-disk drives used in early versions of the iPod.
Although the two companies later clashed in court over intellectual property, the Korean attended Mr Jobs's memorial service. South Korean heirs typically don't succeed a living parent. In the meantime, investors will be watching how Jay Y handles the Note 7 recall. (Bloomberg)