STORY: Philips CEO Frans van Houten will stand down.

Tuesday's announcement comes as the firm undergoes a massive product recall that has halved its market value over the past year.

The company said van Houten would be replaced in October by Roy Jakobs, who heads its Connected Care businesses.

Van Houten's third term as CEO was not due to end until April.

He said he was 'happy with the outcome' and that now was a 'logical moment' to hand over.

A special shareholder meeting will be held on Sept. 30 to appoint Jakobs as CEO.

Philips shares were up close to 3% by early afternoon in Amsterdam.

But those same stocks are still down more than a half since the company shocked investors in June 2021 by recalling 5.5 million ventilators used to treat sleep apnoea.

Philips said foam used in the devices could degrade and emit dangerous gases.

Van Houten led the transformation of the once-sprawling conglomerate into a focused healthcare specialist.

He spun off its lighting and consumer electronics divisions during his time in charge.