Smartphones have been slowly killing the satnav but they could now revive TomTom, Europe's largest navigation device company.

TomTom's shares soared as high as 16.5% on the Amsterdam stock exchange on Tuesday, after the company said its technology was being used in Apple's latest phone software.

With drivers who do not already own satnavs increasingly turning to their mobile phones for digital route planning, TomTom's share price had declined 40% over the last 12 months, and its March results saw overall sales revenue fall 35% on the previous quarter.

Apple will oust Google Maps as the default navigation app on its iOS 6 software, to be released this autumn. In its place will be a new mapping service designed by Apple, which with TomTom's help will be able to offer turn-by-turn navigation and live traffic information for the first time.

"TomTom has signed a global agreement with Apple for maps and related information," the Dutch company said, while declining to give further information on its deal with the notoriously secretive Californian group.

However, the arrangement is likely to be similar to the deal TomTom struck with Blackberry last month. The live traffic information TomTom collects from highways agencies and its own network of internet connected satnavs, which allows satnavs to suggest alternative routes to bypass jams, is being used in the Blackberry navigation app, as are TomTom maps and location content.

"The deal is a boost for TomTom because of the huge installed base of Apple product users and because of the brand and all that it stands for itself: innovation, ease of use and quality," wrote analyst Martijn den Drijver at Amsterdam's SNS Securities in a note to investors.

The deal could have a sting in the tail for TomTom. Sales of its own-brand navigation app from the iTunes store will be dented, as billions of iPhone owners will receive the company's technology for free once they download iOS 6.

Den Drijver said TomTom's fees from Apple would "largely depend on advertising revenue and a small nominal fee per map if turn-by-turn navigation is used".

TomTom shares rose to a high of €3.81 (£3.07) on Tuesday morning, a 16.5% increase on Monday's closing price, before investor appetite subsided. By lunchtime they were trading 12.35% up at €3.67.

Apple has used Google Maps as the default app for iPhones since 2007, but Apple customers have been getting an increasingly second-class service. This is because Google has introduced innovations such as turn-by-turn navigation and enhanced graphics for phones running its own Android software only.

Google brought guided navigation to its Android mapping app in 2009, and introduced vector graphics, which render images faster because they are drawn by the device rather than downloaded from a server, in 2010. These enhancements are still not available on the default Apple version of its software.