The unprecedented global recall and the consequent decision to scrap Samsung’s Galaxy Note 7 smartphones puts immense pressure on Lee Jae-yong, the heir apparent to the nation’s largest business empire, as he faces the biggest crisis ever at a critical time when the group is gearing up for a leadership transition.

The Samsung Electronics vice chairman is set to join the boardroom after a shareholders’ meeting on Oct. 27, a move seen as him tightening his grip on the tech giant after the smartphone crisis.

With just two weeks remaining for the vote, the market remains uncertain on how he will contain the fallout from the fall of its flagship model, and seek a breakthrough for the crisis-hit tech giant.

While the company’s decision to discontinue the production of the entire Note 7 smartphones aims to minimize additional risks, the problem is expected to haunt the tech giant for the time being.

This week, the US Consumer Product Safety Commission is set to reveal the results of its investigation into five Note 7 incidents. The cases reportedly involve replaced units. The suspension is expected to cost Samsung a multitrillion-won sum in addition, according to industry watchers.

In addition to the smartphone crisis, Lee also faces mounting pressure from a US activist hedge fund to split Samsung Electronics into holding and operating units, with a Nasdaq listing of the latter.

The proposal by Elliott Management has laid favorable grounds for him to reshape the firm’s corporate structure to speed up the leadership transition. Samsung has remained calm. Experts say the vice chairman’s relatively small share in Samsung Electronics, 0.59 percent, could be a problem for him to make an immediate decision.

Since his father, Samsung Chairman Lee Kun-hee, collapsed from a heart attack 2 1/2 years ago, the group has been pushing a series of structural changes through high-profile splits, mergers and assets sales.

But the group has been reluctant to make a bold move without winning shareholders’ endorsement, particularly after a bitter lesson it learned from a proxy fight between Elliott over the merger of two Samsung affiliates.

The nature of Elliott as a foreign hedge fund for the South Korean tech giant is hard to overlook, as 50 percent of its shares are in the hands of investors overseas, experts say.

By Cho Chung-un (christory@heraldcorp.com)