What happened

Himax Technologies (NASDAQ:HIMX) dropped 67.1% in 2018, according to data from S&P Global Market Intelligence . Last year was a brutal one for Chinese tech stocks, and the semiconductor company had struggles of its own stemming from a weakened outlook for its 3D face-scanning chips.

CQQQ Chart

CQQQ data by YCharts.

Investors looking for a breakthrough on adoption for the company's scanning technology were left wanting, and punished the stock as major progress on that front proved elusive. Himax is counting on its 3D sensor chips to offset softening demand for its display-driver chips, and its stock has been prone to volatile swings as the market has faced the difficult task of charting the future performance of the company's growth business.

A girl using a mobile phone.

Image source: Getty Images.

So what

Himax's chips were used to bring facial recognition technology to Apple's iPhone line, and shareholders have been hoping that the company's technology will also see widespread adoption in Android phones. With sales for Apple's handsets slowing and Android phone manufacturers being slower than expected to introduce facial scanning, investors didn't get the growth story they wanted last year.

Chinese technology stocks sold off in 2018 due to slowing economic growth, trade tensions with the U.S., and broader concerns that unpredictable companies had become too richly valued. The Invesco China Technology ETF, a fund that combines more than 70 Chinese technology stocks and is a good benchmark for the sector's performance, lost more than a third of its value in 2018 -- and it's not surprising that Himax stock posted big declines and lagged sector performance.

Now what

Himax stock has regained some ground early in 2019, with shares trading up roughly 15.5% in January's trading so far.

HIMX Chart

HIMX data by YCharts.

The chip company's stock still trades at a big discount compared to where it was a year ago, and could break out if there are indications that adoption for its 3D sensor technology in mobile devices and automobiles is increasing. Shares, which are trading at roughly 25 times the company's estimated 2018 earnings, remain a somewhat speculative investment, but the dividend does yield roughly 2.2%.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.