how I would do it

generate_chips.py

def generate_area(x,y, ignore):
    """ generates a one dimensional representation of boolean values

        the key part is that ignore contains a list of points that is set to false
    """
    return [i not in ignore for i in range(x*y)]


def ignore_square(start, linelength):
    """ generate a square of elements to ignore """
    end = linelength - start
    top_left_point = start*linelength+start
    top_right_point = start*linelength+end
    bottom_left_point = end*linelength+start
    bottom_right_point = end*linelength+end

    # +1 because that's how range works
    line_top=range(top_left_point, top_right_point+1)
    line_bottom=range(bottom_left_point, bottom_right_point+1)

    # - the last parameter of range is a step, we always step one line further
    # - here we add an additional line to the start and remove the +1 since the corner points are already generated
    line_left=range(top_left_point+linelength, bottom_left_point, linelength)
    line_right=range(top_right_point+linelength, bottom_right_point, linelength)

    return line_top + line_bottom + line_left + line_right


class Chip(object):
    """ generates a chip layout; adapt str() method to change output """

    def __init__(self, size, symbol_true = "o", symbol_false = " "):
        """
        :param size: the size of the whole square
        :param symbol_true: (opt) change how the pins should be represented
        :param symbol_false: (opt) change how the empty places should be represented
        """
        self.size_x = size
        self.size_y = size
        self.symbol_true = symbol_true
        self.symbol_false = symbol_false
        self.ignores = []
        self.regenerate()

    def regenerate(self):
        """ recreate whole data after changing some of the datapoints """
        self.area = generate_area(self.size_x, self.size_y, self.ignores)

    def ignore(self, distance):
        """ ignore a square inside """
        self.ignores += ignore_square(distance, self.size_x)
        self.regenerate()
        return self

    def __str__(self):
        out = ""
        for py in range(self.size_y):
            for px in range(self.size_x):
                out += self.symbol_true if self.area[px+py*self.size_x] else self.symbol_false
            out += "\n"
        return out


def main():
    print "complete:"
    print Chip(15)
    print
    print "your example:"
    print Chip(15).ignore(5)
    print
    print "another example:"
    print Chip(15).ignore(3)

if __name__ == '__main__':
    main()