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In telecommunication, signal processing, and thermodynamics, companding (occasionally called compansion) is a method of mitigating the detrimental effects of a channel with limited dynamic range. The name is a portmanteau of compressing and expanding.

While the compression used in audio recording and the like depends on a variable-gain amplifier, and so is a locally linear process (linear for short regions, but not globally), companding is non-linear and takes place in the same way at all points in time. The dynamic range of a signal is compressed before transmission and is expanded to the original value at the receiver.

The electronic circuit that does this is called a compandor and works by compressing or expanding the dynamic range of an analog electronic signal such as sound. One variety is a triplet of amplifiers: a logarithmic amplifier, followed by a variable-gain linear amplifier and an exponential amplifier. Such a triplet has the property that its output voltage is proportional to the input voltage raised to an adjustable power. Compandors are used in concert audio systems and in some noise reduction schemes such as dbx and Dolby NR (all versions).

Companding can also refer to the use of compression, where gain is decreased when levels rise above a certain threshold, and its complement, expansion, where gain is increased when levels drop below a certain threshold.

The use of companding allows signals with a large dynamic range to be transmitted over facilities that have a smaller dynamic range capability. For example, it is employed in professional wireless microphones since the dynamic range of the microphone audio signal itself is larger than the dynamic range provided by radio transmission. Companding also reduces the noise and crosstalk levels at the receiver.

Companding is used in digital and telephony systems , compressing before input to an analog-to-digital converter, and then expanding after a digital-to-analog converter. This is equivalent to using a non-linear ADC as in a T-carrier telephone system that implements A-law or μ-law companding. This method is also used in digital file formats for better signal-to-noise ratio (SNR) at lower bit rates. For example, a linearly encoded 16-bit PCM signal can be converted to an 8-bit WAV or AU file while maintaining a decent SNR by compressing before the transition to 8-bit and expanding after a conversion back to 16-bit. This is effectively a form of lossy audio data compression.

Many of the music equipment manufacturers (Roland, Yamaha, Korg) used companding for data compression in their digital synthesizers. This dates back to the late 80's when memory chips would often come as one the most costly parts in the instrument. Manufacturers usually express the amount of memory as it is in the compressed form. i.e. 24MB waveform ROM in Korg Trinity is actually 48MB of data. Still the fact remains that the unit has a 24MB physical ROM. In the example of Roland SR-JV expansion boards, they usually advertised them as 8MB boards which contain '16MB-equivalent content'. Careless copying of the info and omitting the part that stated "equivalent" can often lead to confusion.

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