"As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry", Oh-hyun said in a letter to Samsung employees, a copy of which was obtained by The Telegraph.
Lee's father, Lee Kun-hee, who still retains the chairman title, has been bedridden since 2014 due to health problems, and Lee Jae-yong was sentenced to five years in prison in August for bribing former President Park Geun-hye.
He added, the company is making record earnings, which are consequences of decisions and investments from the past.
However, Samsung's legitimate business would appear to be ticking over nicely, with the company revealing its financial forecasts for the rest of the year.
Yonhap Infomax data, based on research from 21 securities firms, also showed that Samsung is expected to post an operating profit of 16 trillion won in the fourth quarter, up 74 percent from a year earlier.
The world's biggest maker of memory chips, smartphones and TVs is set to shatter its annual profit record this year, thanks partly to soaring demand for memory chips.
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And it also has ambient light sensors that adjust the brightness as you move from room to room, or from outdoors to indoors. Thin and light design with an aluminium back, it features a unique ergonomic shape, so you can read comfortably for hours.
However, in a sign of good news for the company, its estimated operating profits for the third quarter of 14.5 trillion won (US$12.8 billion) marked a record for quarterly profit, almost tripling the 5.2 trillion won earned a year earlier.
For its bottom-line boost, the company credited the success of its Galaxy S8 smartphone, along with strong memory-chip sales.
Kwon would serve out his term as chairman of the board and board director until March 2018, the company said.
Kwon, however, thinks Samsung is in crisis and urgently needs to find new ways to fuel growth before the record-breaking performance resulting from earlier decisions fades. He is also not stepping down immediately from his two other roles.
"I am anxious about a leadership vacuum at a time when Lee is absent from management", said Mr Chung Sun Sup, chief executive of research firm Chaebul.com, following Mr Kwon's announcement.