Means their next R2 will be a lot smarter, probably beating o3
They should wait for OpenAI to release their full o3 model before, and then come out with R2 for maximum impact.
Regarding Chinese students/researchers in US, this is another 3D chess genius move: it is a very subtle way to workaround embargoes.
Once in US these people can use plenty of hardware for their research, including quantitative tests of different algos, architectures, etc...all stuff that requires huge amount of hardware resources. Then they publish their results for everybody to see and learn and follow up directly without very expensive trial and error.
All Chinese big players, DeepSeek included, have greatly benefited and will benefit from research papers published in US by Chinese authors. So on one hand they give prestige (and indirectly money) to their US Universities/institutes, OTH they help to push the SOTA for all the world to benefit.
It is like: You don't want me to use your GPUs? I come to your home and use them from there. I let you put your institute name on my paper, but as long as you allow me to publish, this is ok for me...and good for the world.
It would be different if the research carried on by Chinese scientists in US would not be allowed to be published, but in those cases, like for instance for defense/military stuff, Chinese scientists are kept out anyway, due to security clearance rules. So all that stuff is made by US citizens without support from Chinese researchers.