In this paper we describe the compression of diphone inventories used by the acoustic synthesis of a concatenative synthesis system. The inventory compression is based on a codebook drawn from the Gaussian mean vectors of phoneme HMMs. There are two encoding/synthesis schemes, a speaker dependent and a speaker independent one. The advantage of the latter is the potential common use of the HM-models by a recognizer and a synthesizer. We describe the steps to encode the inventories as well as the acoustic synthesis using them. Using the proposed method a diphone inventory with 1175 units can be compressed down to 19 kB. We will show that the synthesis quality with HMM-encoded inventories matches the quality of synthesis with AMR- or SPEEX-encoded inventories at noticeably smaller inventory sizes.