The centre-half joined Spanish club Sevilla from Les Gones two years ago and asked to be left out of the side for the Champions League play-off against Braga last week to avoid being cup-tied for European competition.
With Philippe Senderos also leaving the Emirates during the summer, centre-back Laurent Koscielny and Marouane Chamakh were summer recruits for Wenger, who has also been encouraged with the news of Johan Djourou's return from long-term injury.
Squillaci was part of France's miserable World Cup campaign in South Africa, playing in the defeat against the hosts that resulted in the nation finishing bottom of their group.
In an injury-interrupted campaign, he made 14 league starts for Sevilla last season having been a near ever-present the year before.
Australian goalkeeper Mark Schwarzer has also been linked with a move to the Gunners, with Fulham reportedly turning down two bids for the 37-year-old.
Wenger was unable to confirm whether he would be involved in the transfer market again and stated: "We are where we are - we have four great keepers and it is important we give confidence to them for the next game.
"I do not rule it out but at the moment I say I am not in a position to sign anybody. At the moment, it is all dead."
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