Polyurethane foam "blanks" produced by California-based Gordon Clark are used to make many of the world's surfboards.
Mr Clark, who helped invent the modern all-foam surfboard, says environmental regulations forced him out of business.
Fears of a global foam shortage have led to a sharp rise in board prices as surfers snap up already depleted stock.
Mr Clark, known as "Grubby" among surfers, revolutionised the sport in 1958 when he and fellow pioneer Hobie Alter coated a shaped foam block in resin to create an all-foam surfboard.
Previously, surfers could only use wooden boards which often snapped under the force of giant waves.
Jail threat
Now 73, Mr Clark announced his decision to bow out of the industry amid rising concern among local and state authorities about the chemicals used to manufacture the foam blanks.
"It'll be months before things are back up to speed, maybe even years"
He outlined his problems in a seven-page letter to his customers, who include hundreds of small surf shops and family businesses throughout the US.
"For owning and operating Clark Foam, I may be looking at very large fines, civil lawsuits, and even time in prison," Mr Clark wrote.
State authorities in California and in Orange County, where Clark Foam is based, are concerned by the company's machinery and its use of toxic chemicals.
Mr Clark said he was forced to spend $400,000 (£229,000) on legal fees to defend a claim by a former employee, and a similar amount to meet emissions laws.
Custom-made foam boards make up almost 75% of boards sold around the world. Clark Foam supplied foam for 90% of those boards, according to reports.
It is unclear whether another US manufacturer will step into Gordon Clark's shoes.
Bad vibrations
The closure of Clark Foam came as a shock to surfers and board "shapers" across the US.
"Everybody's figuring out how they're going to get on with their life," said Chris Mauro, editor of Surfer Magazine, which described the closure as an "apocalypse" for the sport.
"There's probably a shortage of 2,000 boards a week globally now. It'll be months before things are back up to speed... maybe even years," he told the Associated Press.
On surfing websites enthusiasts have exchanged commiserations and wondered what the future holds for their sport.
"For those of us that ride boards that flex a certain way, there is a feel that cannot be reproduced," one contributor wrote on Surfer magazine's forum.
"I'm too old to flick and fly. I'm in it for the feedback through my feet. I'm really going to miss it."
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~48~RS~)